<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 8, 1998
NEXT GENERATION MEDIA CORP.
(Exact name of registrant as specified in its charter)
Nevada 2-74785-B 88-0169543
(State of (Commission File Number) (IRS Employer Iden-
incorporation) tification No.)
900 North Stafford Street, Suite 2003, Arlington, Virginia 22203
(Address of principal executive offices)
Registrant's telephone number: (703) 516-9888
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
(a) The registrant has initiated a series of transactions that are
intended to result in the acquisition of United Marketing Solutions Inc., a
Virginia corporation ("UMSI"), engaged in the cooperative direct mail marketing
business and the sole operating subsidiary of UNICO, Inc., a Delaware
corporation ("Unico").
On May 8, 1998, the registrant acquired 428,185 shares of the Series C
Preferred Stock and certain subordinated debt totaling $1,034,000 in Unico. In
exchange for Unico's preferred stock and debt, the registrant paid $100,000 and
issued 250,000 shares of callable, cumulative, preferred stock, par value $0.01
per share (the "Series A Preferred Stock") together with 166,667 stock purchase
warrants for the purchase of one share of common stock each at an exercise price
of $0.16 per share and valid for five years from the date of issue.
The holders of the Series A Preferred Stock, as a class, shall alone be
entitled to vote for the election of one director of the registrant's board of
directors (the "Board") for the first nine months from the date of issue and
shall be entitled to vote for the election of two directors of the Board
following nine months from the date of issue. Further, in the event that the
registrant proposes to engage in a sale of substantially all of its assets,
merge with or into another corporation, change its primary lines of business
(those businesses being the direct mail marketing business and community
newspaper business), incur more than $5,000,000 in indebtedness or acquire
property valued in excess of $5,000,000 and not in the ordinary course of
business, such transaction must be approved in advance by at least a majority of
the Series A Preferred Stock issued and outstanding at the time of such vote in
addition to any other requirements for the registrant to take such action. The
sale of the Series A Preferred Stock was a private transaction under Section
3(b) of the Securities Act of 1933, as amended (the "Securities Act").
On May 8, 1998, the registrant and Unico executed a Stock Purchase
Agreement to provide for the acquisition of all of the issued and outstanding
stock of UMSI and the merger of UMSI into a special purpose subsidiary of the
registrant with UMSI as the surviving corporation, thereby resulting in UMSI
becoming a wholly owned subsidiary of the registrant (the "Transaction"). In
exchange for the capital stock of UMSI, the registrant shall pay consideration
in the form of 200,000 shares of the registrant's common stock. Alternatively,
shareholders in Unico (who must approve the Transaction) may receive $0.10 per
share of Unico common stock if such holder so elects at the time of the Unico
shareholder vote on the Transaction in lieu of such Unico common stock holder's
proportionate amount of the 200,000 shares of the registrant's common stock.
The proposed acquisition by the registrant of UMSI is being
2
<PAGE> 3
funded in part through the issuance of common stock and/or cash, as described
above. In addition, the registrant has agreed to extinguish certain debts of
Unico up to $150,000, to assume certain debts of Unico (principally a secured
loan from BancFirst, an Oklahoma banking corporation, in the principal amount of
approximately $450,000) and to provide additional cash to Unico of $250,000 in
the form of a loan that will be transferred by Unico to its subsidiary, UMSI, to
be used as working capital. The cash consideration for the Transaction has been
obtained, in part, by the registrant through the sale, in a separate
transaction, of 70,000 shares of redeemable, cumulative, preferred stock, par
value $0.01 per share (the "Series B Preferred Stock") together with 250,000
stock purchase warrants for the purchase of one share of common stock each at an
exercise price of $0.16 per share and valid for five years from the date of
issue to T.C. Equities Ltd., a Bahamian investment company ("T.C. Equities"), in
exchange for $350,000 in cash. The sale of the Series B Preferred Stock was a
private transaction under Section 3(b) of the Securities Act.
In exchange for the $350,000, the registrant has agreed to provide
additional consideration to T.C. Equities in the form of the Series C Preferred
stock and certain common stock (described below) of Unico acquired by the
registrant. These transactions would result in the transfer of all of the
registrant's interests in Unico to T.C. Equities and the acquisition of
effective control of Unico by T.C. Equities upon consummation of the
Transaction.
The registrant intends to obtain 45,000, 179,650 and 169,432 shares,
respectively, of common stock of Unico (and the cancellation of any options to
purchase shares of Unico) (the "Directors' Unico Shares") held by Leon Zajdel
("Zajdel"), Gerard R. Bernier ("Bernier") and Gerald Bomstad, Jr. ("Bomstad"),
members of Unico's board of directors, for transfer to T.C. Equities, as
described above. The Directors' Unico Shares (and in the case of Bomstad, the
acquisition of a promissory note from Unico to Bomstad in the principal amount
of $12,000 and with accrued interest of $1,400 that would be forgiven by the
registrant) would be obtained through the sale of common stock of the
registrant. Further, the registrant intends to exchange certain indebtedness, in
an amount of $45,953.91, held by Joel P. Sens ("Sens") for 137,587 shares of
common stock of the registrant.
Certain shareholders of the registrant have, contemporaneous with the
above-described transactions, entered into a shareholder agreement whereby they
have agreed to vote their shares in order to bring about certain changes in the
registrant's management. As a result of (1) this shareholder agreement, (2) a
resolution of the Board and (3) the terms of the Series A Preferred Stock, the
Board will, upon consummation of the Transaction, be comprised of five
directors: one member of the Board will be nominated and elected by the holders
of the Series A Preferred
3
<PAGE> 4
Stock; two members of the Board will be nominated by Bernier; one member of the
Board will be nominated by Sens; and one member of the Board will be nominated
by the other members of the Board. The composition of the Board may change in
the future based on certain events or the failure of certain events to occur.
The Board intends to appoint Bernier, currently the President and Chief
Executive Officer ("CEO") of Unico and UMSI, as President and CEO of the
registrant and confirm Bernier as President and CEO of UMSI upon consummation of
the Transaction. The registrant intends to appoint Bernier as a consultant
pending consummation of the Transaction.
As indicated above, the cash components of the foregoing transactions
were funded in part by the proceeds of the sale of the Series B Preferred Stock
and other consideration to T.C. Equities. The registrant hopes to engage in
other transactions which may include further sales of common stock and/or loans
in order to obtain sufficient funds to complete the Transaction. However, there
can be no assurance that the registrant will be able to engage in such
transactions or obtain such funds. If the registrant is unable to obtain
sufficient additional funds, it will be unable to complete the Transaction, the
registrant will be in breach of its contractual obligations to, among others,
Unico, and the registrant's business, financial condition and results of
operations will be materially adversely affected.
(b) The registrant will acquire from Unico as part of the Transaction,
all of the capital stock of UMSI. UMSI is engaged in cooperative direct mail
advertising through franchising and production. UMSI's business involves the
design, layout, printing, packaging and distributing of public relations,
marketing materials and promotional coupons for private businesses, usually
involved in retailing goods or providing professional services. Franchising
activities related to this business involve the granting and administering of
independent franchise operations to conduct cooperative direct mail advertising
sales. As of December 31, 1997, UMSI had approximately 65 active franchise
operations. UMSI operates its corporate headquarters and its coupon sales and
franchise activities through an office and production facility at 8380 Alban
Road, Springfield, VA 22150. UMSI had approximately 95 employees as of December
31, 1997. The registrant intends to continue such use of such property and
facilities.
Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits
(a) Financial Statements. The registrant shall provide the information
required by Item 310 (c) and (d) of Regulation S-B in lieu of the financial
information required by Item 7 of this Form, by amendment, within sixty days of
the date on which this Form 8-K must be filed.
(c) Exhibits.
4
<PAGE> 5
Exhibit 2.1 Letter agreement dated as of March 18, 1998 among the
registrant, Renaissance Capital and the Duncan-Smith Company
providing for the purchase of the Series C Preferred stock and
certain indebtedness of UNICO, Inc.
Exhibit 2.2 Amendment dated as of April 30, 1998 to the letter agreement
dated as of March 18, 1998 among the registrant, Renaissance
Capital and the Duncan-Smith Company providing for the
purchase of the Series C Preferred stock and certain
indebtedness of UNICO, Inc.
Exhibit 2.3 Stock Purchase Agreement and Plan of Merger among Unico, UMSI,
United Marketing Merger Corp. and the registrant dated as of
May 8, 1998.
Exhibit 2.4 Stock Purchase and Shareholders Agreement among Gerard R.
Bernier, Joel P. Sens, Lawrence Grimes, Kenneth Brochin, David
Grossman and Jeffrey Sens dated as of May 12, 1998.
Exhibit 2.5 Bill of Sale and General Release between Goodhue Smith, as
attorney-in-fact, and the registrant providing for the
purchase of the subordinated debt in and Series C Preferred
stock of Unico, Inc. dated as of May 8, 1998.
Exhibit 2.6 Escrow Agreement among Joel Sens, T.C. Equities Ltd., the Law
Office of Shane Henty Sutton, P.C. and the registrant dated as
of May 1, 1998.
Exhibit 2.7 Stock Purchase Agreement among Joel Sens, Unico Inc., T.C.
Equities Ltd. and the registrant dated as of May 4, 1998.
Exhibit 2.8 Securities Subscription Agreement between T.C. Equities Ltd.
and the registrant dated as of May 7, 1998.
Exhibit 4.1 Resolutions of the Board of Directors as of April 17, 1998
providing for the designations of the Series A Preferred and
Series B Preferred stock and authorizing the transactions.
5
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEXT GENERATION MEDIA CORP.
(Registrant)
Date: May 26, 1998 /s/ Lawrence Grimes
----------------------
By: Lawrence Grimes
Title: President
6
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
2.1 Letter agreement dated as of March 18, 1998 among the registrant,
Renaissance Capital and the Duncan-Smith Company providing for the 9
purchase of the Series C Preferred stock and certain indebtedness
of UNICO, Inc.
2.2 Amendment dated as of April 30, 1998 to the letter agreement dated
as of March 18, 1998 among the registrant, Renaissance Capital and 18
the Duncan-Smith Company providing for the purchase of the Series
C Preferred stock and certain indebtedness of UNICO, Inc.
2.3 Stock Purchase Agreement and Plan of Merger among Unico, UMSI,
United Marketing Merger Corp. and the registrant dated as of May 20
8, 1998.
2.4 Stock Purchase and Shareholders Agreement among Gerard R. Bernier,
Joel P. Sens, Lawrence Grimes, Kenneth Brochin, David Grossman and 54
Jeffrey Sens dated as of May 12, 1998.
2.5 Bill of Sale and General Release between Goodhue Smith, as
attorney-in-fact, and the registrant providing the purchase of the 65
subordinated debt in and Series C Preferred stock of Unico, Inc.
dated as of May 8, 1998.
2.6 Escrow Agreement among Joel Sens, T.C. Equities Ltd., the Law
Office of Shane Henty Sutton, P.C. and the registrant dated as of 68
May 1, 1998.
2.7 Stock Purchase Agreement among Joel Sens, Unico Inc., T.C.
Equities Ltd. and the registrant dated as of May 4, 1998. 72
2.8 Securities Subscription Agreement between T.C. Equities Ltd. and
the registrant dated as of May 7, 1998. 80
</TABLE>
7
<PAGE> 8
<TABLE>
<S> <C> <C>
4.1 Resolutions of the Board of Directors as of April 17, 1998
providing for the designations of the Series A Preferred and 91
Series B Preferred stock and authorizing the transactions.
</TABLE>
8
<PAGE> 1
EXHIBIT 2.1
March 18, 1998
Via Facsimile
Mr. Vance M. Arnold
Renaissance Capital Group, Inc.
Mr. Goodhue Smith
The Duncan-Smith Co.
c/o Vincent Slusher, Esq.
Snell, Brannian & Trent
8160 North Central Expressway, Suite 1800
Dallas, Texas 75208
c/o Matthew Clary, Esq.
Clary & Moore
10306 Eaton Place, Suite 240
Fairfax, Virginia 22030
Gentlemen:
This letter outlines a proposal by which Next Generation Media
Corp. (the "Buyer") will acquire:
- - all of the issued and outstanding shares of Series C Preferred stock (the
"Preferred C Shares") of UNICO, Inc., a Delaware corporation (the
"Company"), and
- - all of (1) the promissory notes issued pursuant to the Subordinated Loan
agreement with an outstanding principal balance of $300,000 dated June 30, 1995
among the Company, Cal-Central Marketing Corporation and the Harlon Morse
Fentriss Trust, Philip Stephenson, Jr., RHOJOAMT Partnership Ltd., CITCAM Stock
Co., Barbara Grinnan and Goose Creek, (2) the subordinated debentures having an
outstanding principal balance of $460,000 issued pursuant to an Indenture and
placed by The Duncan-Smith Company with various investors and (3) the promissory
note(s) issued to Renaissance Capital pursuant to an interim financing agreement
between with the Company with an aggregate principal balance of $274,000
(collectively, the "Subordinated Debt").
The holders of the Preferred C Shares and the Subordinated Debt are collectively
referred to herein as the "Sellers." The proposed acquisition is subject to and
encompasses the following terms and conditions:
1. The effective date of this acquisition (the "Series C/Sub Debt
Purchase") will be as of the date on which Buyer and the Company execute a
definitive agreement providing for the
9
<PAGE> 2
acquisition by Buyer of all of the outstanding shares of United (the "United
Purchase"). The closing will be at Washington, D.C. at a time selected by the
Buyer and the Sellers' representatives upon execution of the definitive
agreement. The Buyer shall endeavor to effect the closing of the Series C/Sub
Debt Purchase and the execution of the definitive agreement for the United
Purchase by March 31, 1998, but in no case will the closing take place later
than May 1, 1998, unless mutually agreed by the parties.
Buyer will pay $1,350,000 (the "Purchase Price") for the Preferred C
Shares and the Subordinated Debt in the form of (1) $100,000 cash and (2)
250,000 shares of its Callable Cumulative Convertible Preferred stock ("NexGen
Preferred").(1/) Each 1-1/2 shares of NexGen Preferred will be accompanied by
one stock purchase warrant that will entitle the holder to purchase one share of
the Buyer's common stock at an exercise price of $0.16, valid for five years
from the date of issue.
The number of warrants to be provided to Sellers will be subject to
adjustment based on the price per share at which the Buyer effects a private
placement or initial public offering of its common stock following the Buyer's
acquisition of United (the "NexGen Placement/Offering"). If the NexGen
Placement/Offering is made at a price up to $3.50 per share, Sellers will
receive a total of 250,000 warrants; if the NexGen Placement/Offering is made at
a price in the range $3.51 - $4.00 per share, Sellers will receive a total of
200,000 warrants; if the NexGen Placement/Offering is made at a price in the
range $4.01 -$4.50 per share, Sellers will receive a total of 185,000 warrants;
and if the NexGen Placement/Offering is made at a price of $4.51 per share or
higher, there will be no adjustment to the warrants issued to Sellers. The Buyer
shall endeavor to ensure that the NexGen Placement/Offering will result in the
receipt of a minimum of $2,000,000 of net proceeds to Buyer. Buyer agrees to use
(1) 35% of the first $1,000,000 and (2) 50% of any net proceeds in excess of
$1,000,000 from the NexGen Placement/Offering to redeem NexGen Preferred stock.
In the event the proceeds of more than one placement or offering at different
prices are used to redeem the NexGen Preferred Stock, the warrant adjustment
contemplated by this paragraph will be applied on a weighted average basis of
the various offering prices in the placements or offerings, the proceeds of
which are used to effect such redemption. The balance of the net proceeds from
the NexGen Placement/Offering shall be used to provide a capital infusion to
Buyer's newly acquired subsidiary, United, except for payments of obligations of
Buyer approved by Buyer's board of directors after the United Purchase.
2. As part of the transaction, the Sellers represent and
- ----------
(1/) Buyer will not issue fractional shares and will issue NexGen Preferred
shares to each Seller by rounding up or down to the nearest whole number of
shares.
10
<PAGE> 3
warrant to Buyer, among other things, that the Preferred C Shares and
Subordinated Debt they are selling represent all of the Preferred C Shares or
Subordinated Debt of the Company. In addition, the Sellers shall agree to
execute powers of attorney to provide for the authority of one or more
representatives of Sellers to effect the sale of the Preferred C Shares and the
Subordinated Debt to Buyer at the closing.
3. At the closing, the Sellers shall deliver to Buyer stock
certificates endorsed in blank for all of the Class C Preferred Shares as well
as the promissory notes endorsed to the order of Buyer. Sellers represent and
warrant that they have good title to the Class C Preferred Stock and the
promissory notes, that the Class C Preferred Stock is validly issued, fully paid
and nonassessable, that the Class C Preferred Stock and promissory notes are
free and clear of liens and encumbrances, and that the Sellers can transfer them
without the consent of any third parties. As part of these transactions, Sellers
shall convey to Buyer all right, title and interest in and to any claims or
causes of action they may have against the Company, its affiliates or any member
of its board of directors (the "Unico Board"), in their capacity as Sellers,
creditors or as common shareholders in the Company, from the beginning of time
to the date of these transactions, as a result of any past actions taken or not
taken by the Unico Board or the Unico Board's decision to enter into the United
Purchase. Buyer agrees that it will assert no claims or bring no actions against
the Sellers or any of them as a result of any actions by the Unico Board from
the beginning of time to the date of these transactions, including without
limitation any action or failure to act by the Unico Board with respect to the
acquisition of United by NexGen.
4. Upon the approval by Unico's Board of the purchase of United by
Buyer, you will not discuss or negotiate with any other corporation, firm or
other person, or entertain or consider any inquiries or proposals relating to
the possible disposition of the Preferred C Shares, the Subordinated Debt or the
business of the Company, including United.
5. The Duncan-Smith Co. shall recommend to and undertake their best
efforts to obtain the approval of all Sellers to the Series C/Sub Debt Purchase.
To facilitate the foregoing approval, the Company will send a copy of this
letter and an outline of the terms of agreement to the other Sellers together
with such other information as may be required by law or determined by the
Company to be necessary in order to obtain the consent of the holder of the
Series C Preferred Stock and the Subordinated Debt. This offer and the closing
herein contemplated is contingent upon Buyer's acquiring one hundred percent
(100%) of the Preferred C Shares and the Subordinated Debt free and clear of all
options, liens and other claims.
6. The closing hereunder is subject, among other things,
11
<PAGE> 4
to the following:
a. Approval by the board of directors of Buyer;
b. Approval by the Board and shareholders of the Company of
the United Purchase;
c. Any necessary approvals required under all loan agreements,
indentures or other debt documents of the Company, including without limitation
with BancFirst;
d. Approval by any necessary governmental authorities; and
e. Receipt of all necessary third party consents.
7. Any and all expenses incurred on behalf of the Sellers in connection
with the Series C/Sub Debt Purchase hereunder, including, but not limited to,
attorney's fees, accounting fees and other services and expenditures on their
behalf, shall be borne by the Sellers and shall not be paid by or incurred for
the account of the Company.
The Series C/Sub Debt Purchase and the United Purchase are
further described in the term sheet attached hereto as Annex A. The terms of
agreements between Mr. Joel Sens, majority shareholder of Buyer, and Mr. Gerard
Bernier, President of United, are described in the term sheet attached hereto as
Annex B.
This letter agreement shall terminate upon the earliest of (a)
Wednesday, March 25, 1998 at 5:00 p.m. if the Unico Board has failed to elect by
that time to enter into the United Purchase; (b) the closing of the Series C/Sub
Debt Purchase and execution of a definitive agreement for the United Purchase
and (c) May 1, 1998, unless the parties hereto otherwise agree in writing. No
public announcement of the matters contemplated herein shall be made by any
party hereto without the prior consent of the other parties hereto.
Very truly yours,
BUYER:
By: /s/ Larry Grimes
----------------
Name: Larry Grimes
Title: President
12
<PAGE> 5
AGREED AND ACCEPTED:
Renaissance Capital
By: /s/ Vance Arnold
-------------------
Name: Vance M. Arnold
Title:
---------------
Duncan-Smith Company
By: /s/ Goodhue Smith
-------------------
Name: Goodhue Smith
Title:
---------------
13
<PAGE> 6
A. Annex A
UNICO - NEXT GENERATION MEDIA CORP. TRANSACTION
TERM SHEET
TRANSACTION: A purchase of the preferred stock and subordinated
debt of UNICO, Inc. ("Unico") with preferred stock of Next
Generation Media Corp. ("NexGen") and cash followed by a
merger between United Marketing Solutions, Inc., formerly
known as United Coupon Corporation ("United"), a subsidiary of
Unico, and a newly formed subsidiary ("MergerCo") of NexGen,
in which MergerCo will be merged into United with United as
the surviving entity. NexGen will acquire 100% of the
securities in United making it a wholly-owned subsidiary of
NexGen.
PROPOSED TERMS
1. SERIES C PREFERRED STOCK AND SUBORDINATED DEBT
Unico's existing subordinated debt and Series C Preferred
stock holders will receive 250,000 shares of NexGen's newly issued Callable
Cumulative Convertible Preferred Stock, par value $0.01 per share ("NexGen
Preferred"). The shares will have a $5.00 per share preference on liquidation or
dissolution after corporation. In addition, NexGen will issue one common stock
purchase warrant for each 1.5 shares of NexGen Preferred with an exercise price
of $0.16 per share, valid for five years.(2/) The number of warrants issued by
NexGen in conjunction with the NexGen Preferred will be subject to adjustment
upon the completion of private place or initial public offerings of NexGen's
common stock following the acquisition of United (the "NexGen
Placement/Offering") based on the per share price of NexGen common stock in the
NexGen Placement/Offering.
The NexGen Preferred will be callable, in whole or in part, at
the sole option of NexGen at any time. Upon a call by NexGen, NexGen Preferred
shareholders will have twenty (20) days to elect to convert their NexGen
Preferred to NexGen common stock or be redeemed. If the NexGen Preferred is
called within the first six months after the closing(3/) it will have a
redemption price of $5.00 per share plus all accrued but unpaid dividends up
through the date ten days following the call date. If the NexGen Preferred is
called more than six months after the closing, the
- ----------
(2/) This results in the issuance of 166,667 stock purchase warrants to the
NexGen Preferred shareholders.
(3/) "Closing" means the closing of the merger transaction between MergerCo and
United.
14
<PAGE> 7
redemption price will be $6.00 per share plus all accrued but unpaid dividends
up through the date ten days following the call date. The NexGen Preferred will
pay a cumulative dividend of $.30 per share per annum for the first six months
and $.50 per share per annum thereafter. Dividends will accrue and not be
payable until eighteen months following the closing. Dividends will become
payable provided that the indebtedness to BancFirst is current, in accordance
with the restructuring agreement to be reached with BancFirst.
The NexGen Preferred will be redeemable, at the sole option of
the holder, five years from their date of issuance at a price of $6.00 per share
plus all accrued but unpaid dividends.
The holders of NexGen Preferred shares will vote on equal
terms with the holders of NexGen common shares with the exception that the
NexGen Preferred shareholders, as a class, will be entitled to elect one member
to the NexGen board of directors (the "NexGen Board"). Additionally, in the
event that the NexGen Preferred shares are not called for redemption, or
converted into commons stock within nine (9) months of the Closing, the holders
of the NexGen Preferred Shares, as a class, will be entitled to elect one
additional member to the NexGen Board and the independent director (hereinafter
defined) designated by the other directors shall be replaced in that event.
Approval by the NexGen Preferred shareholders, as a class, will be necessary for
certain extraordinary transactions, including a sale of substantially all of
NexGen's assets, a change in NexGen's primary line of business, incurrence of
more than $5 million of indebtedness and an acquisition of property out of the
ordinary course of business in excess of $5 million. NexGen shall enact a bylaw
restricting the number of NexGen Board seats to five, including the director
selected by the NexGen Preferred. Two of the current directors shall remain on
the NexGen Board. One director will be selected by Mr. Gerard Bernier. The fifth
director shall be an independent director nominated by the other four directors.
The conversion price for NexGen Preferred will be affected by
whether or not NexGen has filed a preliminary Form S-1 (or other applicable
registration statement form for an initial public offering) with the Securities
and Exchange Commission for an offering of NexGen's common stock (an "IPO")
prior to the expiration of six months after the closing of the proposed
transaction.
NexGen Stock Sale Before Six Months
The NexGen Preferred will be convertible into NexGen common
stock, at the holder's option, beginning six months after the closing at a
conversion price which is the lesser of (a) $5.00 and (b) 110% of the price for
common stock issued in a private placement or initial public offering of NexGen
securities ("NexGen Stock Sale"). For example, if the NexGen Stock Sale
15
<PAGE> 8
occurs at $6.00 per share, the conversion price used will be $5.00 and the
250,000 shares of NexGen Preferred would be convertible into 250,000 shares of
NexGen common stock. If the NexGen Stock Sale occurs at $4.50 per share, the
conversion price would be $4.95 (110%), and the 250,000 shares of NexGen
Preferred would be convertible into approximately 252,525 shares of NexGen
common stock.(4/)
No NexGen Stock Sale Before Six Months
The NexGen Preferred will be convertible into NexGen common
stock at a conversion price which is the lesser of (a) $4.50 and (b) 110% of the
price for the stock, in the NexGen Stock Sale. For example, if the NexGen Stock
Sale occurs at $5.00 per share of NexGen Common, the conversion price used will
be $4.50 and the 250,000 shares of NexGen Preferred would be convertible into
approximately 300,000 shares of NexGen common stock. If the NexGen Stock Sale
occurs at $3.00 per share, the conversion price would be $3.30 (110%), and the
270,000 shares of NexGen Preferred would be convertible into approximately
409,091 shares of NexGen common stock.
2. COMMON STOCK
Unico will receive 200,000 shares of NexGen common stock in
exchange for all the stock of United. Alternatively, NexGen has agreed to pay
cash consideration equal to Unico for each Unico shareholder that affirmatively
elects, at the time of the Unico shareholder vote concerning the transactions
described herein, to receive a cash dividend from Unico in lieu of NexGen common
stock (the total number of such Unico common shares, the "electing shares"). In
the event that there are any electing shares, (1) the amount of NexGen common
stock paid to Unico will be reduced by the nearest whole number equal to 200,000
multiplied by a fraction, the numerator of which is the number of electing
shares and the denominator of which is the number of issued and outstanding
common shares of Unico and (2) NexGen will also pay Unico in cash $0.10
multiplied by the number of electing shares. The merger and exchange of common
stock will follow appropriate filings by Unico and NexGen with the Securities
Exchange Commission and a shareholder vote by the Unico common shareholders.
NexGen will vote its Unico Series C Preferred in favor of the transaction and
will agree to allow those shares to be retired by Unico for nominal
consideration. NexGen will also agree to allow the cancellation of the Unico
subordinated debt and associated warrants. NexGen will pay additional cash
consideration to the extent necessary to extinguish additional debt of
approximately $150,000 of Unico to the extent that creditors holding such debt
do not consent to the assignment of
- ----------
(4/) No fractional shares will be issued. Fractional shares of .5 and above will
be rounded up to the nearest whole share; fractional shares below .5 will be
rounded down.
16
<PAGE> 9
such debt to NexGen and release of Unico within ninety (90) days of closing.
3. NO OTHER SECURITIES
No other securities (i.e., outstanding warrants and options)
will be exchanged by NexGen.
4. MISCELLANEOUS
The acquisition of the Unico subordinated debt and Series C
Preferred shares and the common shares of United by NexGen is contingent upon a
satisfactory restructuring of Unico's debt to BancFirst. The balance of the
proceeds of the any IPO or private placement of NexGen common stock, not used to
redeem NexGen Preferred or to pay obligations of NexGen agreed to by its board
of directors after the merger transaction, will be used to provide a capital
infusion to United. So long as NexGen Preferred shares are outstanding, Mr. Joel
Sens will not be an officer or director of NexGen.
17
<PAGE> 1
EXHIBIT 2.2
April 30, 1998
Via Facsimile
Mr. Vance M. Arnold
Renaissance Capital Group, Inc.
Mr. Goodhue Smith
The Duncan-Smith Co.
c/o Vincent Slusher, Esq.
Snell, Brannian & Trent
8160 North Central Expressway, Suite 1800
Dallas, Texas 75208
c/o Matthew Clary, Esq.
Clary & Moore
10306 Eaton Place, Suite 240
Fairfax, Virginia 22030
Gentlemen:
This letter is to confirm our understanding of the
negotiations of today regarding the transaction described in our letter
agreement of March 18, 1998 (the "Letter Agreement") and the revisions necessary
to complete the transaction contemplated by the Letter Agreement. Next
Generation Media Corp. ("NexGen") has established two classes of preferred
shares, the Series A Preferred Stock and the Series B Preferred Stock. The
holders of the issued and outstanding shares of Series C Preferred stock of and
certain subordinated debt in UNICO, Inc. will receive shares of the Series A
Preferred Stock. T.C. Equities Ltd., a Bahamian investment company, will receive
shares of the Series B Preferred Stock in exchange for cash. The Series B
Preferred Stock ranks pari passu with the Series A Preferred Stock and does not
rank superior to the Series A Preferred Stock in terms of liquidation
preference.
In the Letter Agreement, NexGen agreed to use part of the
proceeds of a private placement or initial public offering of NexGen's common
stock (the "NexGen Placement/Offering") following its acquisition of United
Marketing Solutions Inc. to redeem the Series A Preferred Stock. NexGen hereby
agrees to use 50% of any net proceeds from the NexGen Placement/Offering to
redeem the Series A Preferred stock. This is a change from our original
commitment to use only 35% of the first $1,000,000 and 50% of amounts above
$1,000,000 from the NexGen Placement/Offering to redeem the Series A Preferred
stock.
Finally, this letter serves to inform you that NexGen has
agreed with T.C. Equities Ltd., the holder of the Series B Preferred stock, that
NexGen will cause the redemption of that
18
<PAGE> 2
amount of the Series B Preferred stock eligible to be put back to NexGen six
months after the date of its issuance (that is, 50%) prior to six months if
NexGen has sufficient funds available to cause this early redemption. NexGen
agreed to this provision in exchange for T.C. Equities Ltd. dropping its demand
for certain non-dilution rights that NexGen believed would make it more
difficult for NexGen to engage in a NexGen Placement/Offering.
This letter hereby amends the Letter Agreement. Please
indicate your agreement be signing the letter below and returning it to NexGen
c/o Michael O'Connor, Williams & Connolly, fax number (202) 434-5029.
Very truly yours,
NEXGEN:
By: /s/ Larry Grimes
------------------------------------
Name: Larry Grimes
Title: President
AGREED AND ACCEPTED:
RENAISSANCE CAPITAL
By: /s/ Vance M. Arnold
-------------------------
Name: Vance M. Arnold
Title:
----------------------
DUNCAN-SMITH INVESTMENTS INC.
By: /s/ Goodhue Smith
-------------------------
Name: Goodhue Smith
Title:
----------------------
19
<PAGE> 1
EXHIBIT 2.3
STOCK PURCHASE AGREEMENT AND
PLAN OF MERGER
UNICO INC.,
UNITED MARKETING SOLUTIONS INC.,
NEXT GENERATION MEDIA CORP. and
UNITED MARKETING MERGER CORP.
20
<PAGE> 2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated the 8th day of
May, 1998, among UNICO, INC., a Delaware corporation ("Seller"), UNITED
MARKETING SOLUTIONS INC., a Virginia corporation formerly known as United Coupon
Corporation ("UMSI"), NEXT GENERATION MEDIA CORP., a Nevada corporation
("Buyer"), and UNITED MARKETING MERGER CORP., a Virginia corporation ("Newco").
RECITALS
A. Seller owns 100% of the issued and outstanding shares of the
capital stock of UMSI.
B. Seller desires to sell, and Buyer desires to purchase, all of
Seller's shares of capital stock of UMSI, for the
consideration and upon the terms and subject to the conditions
hereinafter set forth.
C. The parties desire that Newco shall be merged with and into
UMSI (said transaction being hereinafter referred to as the
"Merger") pursuant to a plan of merger substantially in the
form set forth in Annex A hereto (the "Plan of Merger").
D. The parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in
connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and for other
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
1. Purchase and Sale of Stock and Merger.
1.1. Agreement to Purchase and Sell. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date (as defined below),
Seller shall sell to Buyer, and Buyer shall purchase from Seller, 1 share of
common stock (the "UMSI Shares"), par value $20.00, of UMSI ("UMSI Common")
representing 100% of the issued and outstanding capital stock of UMSI.
1.2. Purchase Price. In exchange for the UMSI Shares, Buyer agrees to
pay the purchase price in the form of (a) 200,000 shares of Buyer's common
stock, par value $0.01 ("NexGen Common") divided ratably (and rounded to the
nearest whole share) among the holders of the common stock of Seller (the
"Merger Consideration") and (b) up to $150,000 cash (the "Debt Pay-Off
Consideration," and, together with the Merger Consideration, the "Purchase
Price") for the payment of debts of Seller to the extent that creditors of
Seller (other than BancFirst, an
21
<PAGE> 3
Oklahoma banking corporation ("BancFirst")) do not consent to the assignment of
such debt by Seller, the assumption of such debt by Buyer and the release of
Seller in respect of such debt by such creditor. The Merger Consideration shall
be paid to the holders of Seller's issued and outstanding common stock, par
value $0.01 per share ("Unico Common), provided, however, that the Merger
Consideration will not be paid to Buyer for any shares of Unico Common held by
Buyer. The Debt Pay-Off Consideration shall be paid to Seller. The Merger
Consideration may be adjusted according to the following:
1.2.1. Merger Consideration Adjustment - Cash Component. At
the time of the vote of the holders of Seller's capital stock on the
Transactions (as defined herein), the holders of Seller's common stock ("Unico
Common Holders") who shall receive Merger Consideration, may elect to receive
cash in lieu of NexGen Common. If any Unico Common Holder so elects, Buyer shall
pay to each Unico Common Holder so electing a cash component of the Merger
Consideration equal to $0.10 multiplied by the number of shares of Unico Common
held by such Unico Common Holder.
1.2.2. Merger Consideration Adjustment - NexGen Common
Component. If any Unico Common Holder votes to receive cash in lieu of NexGen
Common, the Unico Common Holders that do not so elect shall receive their
ratable shares of the Merger Consideration in NexGen Common as if all Unico
Common Holders were receiving NexGen Common for their ratable share of the
Merger Consideration.
1.3. Payment of Purchase Price. The Purchase Price shall be payable as
follows:
1.3.1. Buyer shall pay the Unico Common Holders the Merger
Consideration upon the Closing (as defined herein).
1.3.2. Buyer shall pay Seller the Debt Pay-Off Consideration
within ninety (90) days of the Closing.
1.4. Closing. The closing of the purchase and sale of the UMSI Shares
(the "Closing") shall take place at the offices of Williams & Connolly,
Washington, D.C., as soon after the vote of the shareholders of Seller as is
practicable (such date, the "Closing Date").
1.5. Merger. UMSI and Newco are constituent corporations (the
"Constituent Corporations") to the Merger as contemplated by the Virginia Stock
Corporation Act, as amended (the "VSCA"). At the Effective Time (as defined
herein):
1.5.1. Newco shall be merged with and into UMSI in
22
<PAGE> 4
accordance with the applicable provisions of the VSCA, with UMSI being the
surviving corporate entity (the "Surviving Corporation").
1.5.2. The separate existence of Newco shall cease, and the
Merger shall in all respects have the effect provided for in subsection 1.8.
1.5.3. The Articles of Incorporation of UMSI at the Effective
Time shall become the Articles of Incorporation of the Surviving Corporation.
1.5.4. The bylaws of UMSI at the Effective Time shall become
the bylaws of the Surviving Corporation.
1.6. Filing; Plan of Merger. The Merger shall not become effective
unless this Agreement and the Plan of Merger are duly adopted by the respective
boards of directors of the Constituent Corporations and approved by shareholders
holding the requisite number of shares of Seller and each of the Constituent
Corporations. Upon fulfillment or waiver of the conditions in Section 5 and
provided that this Agreement has not been terminated pursuant to Section 6.2,
the Constituent Corporations will cause the Plan of Merger to be certified,
executed, acknowledged and filed with the Virginia Corporation Commission as
provided in the VSCA. The Plan of Merger is incorporated herein by reference,
and adoption of this Agreement by the Boards of Directors of the Constituent
Corporations and approval by the shareholders of the Constituent Corporations
and of Seller shall constitute adoption and approval of the Plan of Merger.
1.7. Effective Time. The Merger shall be effective at the day and hour
specified in the Articles of Merger (including the Plan of Merger) filed with
the Virginia Corporation Commission (the "Effective Time").
1.8. Effect of Merger. From and after the Effective Time, the Merger
shall have the effect described in the VSCA. At the Effective Time, by virtue of
the Merger and without any action on the part of Constituent Corporations, each
share of the common stock of Newco issued and outstanding immediately prior to
the Effective Time shall no longer be issued and outstanding, and each share of
the UMSI Common issued and outstanding immediately prior to the Effective Time
shall continue to be issued and outstanding. The Surviving Corporation shall
become, by virtue of the Merger and without any action on the part of the
Constituent Corporations, a wholly-owned subsidiary of Buyer.
2. Representations and Warranties of Seller and UMSI. Seller and UMSI each
represents and warrants to Buyer as follows:
2.1. Capital Structure, Organization, Standing and Authority. The
authorized capital stock of Seller consists of 20,000,000 shares of Unico
Common, par value $0.01 per share,
23
<PAGE> 5
and 5,000,000 shares of Preferred Stock, par value $0.01 per share ("Unico
Preferred") of which Seller has one designated series (the "Unico Series C
Preferred"). No other classes of capital stock of Seller are authorized. As of
the date hereof, 2,119,077 shares of Unico Common and 428,185 shares of Unico
Series C Preferred are issued and outstanding, and no other shares of capital
stock of Seller are issued and outstanding. All outstanding shares of Unico
Common and Unico Series C Preferred have been duly authorized and are validly
issued, fully paid and nonassessable. Except as set forth on Schedule 2.1,
Seller has no warrants, options, rights, convertible securities and other
arrangements or commitments that obligate it to issue or dispose of any of its
capital stock or other ownership interests, and stock appreciation rights,
performance units and similar stock-based rights whether or not they obligate
the issuer thereof to issue stock, or other securities or to pay cash
(collectively, "Rights") authorized, issued or outstanding with respect to the
capital stock of Seller. Holders of Unico Common do not have preemptive rights.
Seller is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware with full corporate power and authority
to carry on its business in any other state of the United States or foreign
jurisdiction where such failure would have a material adverse effect on the
financial condition, results of operations, business or business prospects of
Seller.
2.2. Authorization; Validity and Effect of Transaction Documents. The
execution and delivery of this Agreement and all other Transaction Documents (as
defined herein) by Seller, and the consummation by it of the transactions
contemplated hereby and thereby (the "Transactions"), have been duly authorized
by all requisite corporate action (subject to receipt of approval of the Unico
Common Holders of this Agreement and the Plan of Merger). This Agreement
constitutes, and all other agreements and documents contemplated hereby (the
"Transaction Documents"), which are to be executed and delivered by Seller, when
executed and delivered pursuant hereto, will constitute the valid and legally
binding obligations of Seller, enforceable in accordance with their respective
terms (subject to receipt of approval of the Seller's shareholders of this
Agreement and the Plan of Merger). The execution and delivery of this Agreement
and any other Transaction Document does not, and the consummation of the
Transactions will not: (i) require the consent of any third party (other than
the approval of the Seller's shareholders of this Agreement and the Plan of
Merger and the consent of BancFirst), (ii) violate any statute or law or any
rule, regulation, order, writ, injunction, arbitration award, or decree of any
court, administrative or governmental agency, instrumentality, commission,
authority, board or other body (a "Governmental Authority") or require any
authorization, consent, approval, exemption or other action by or notice to any
Governmental Authority; (iii) result in the breach of any term or provision of,
or constitute a default under, or result in the acceleration of or entitle any
party to accelerate (whether after
24
<PAGE> 6
the giving of notice or the lapse of time or both) any obligation under, or
result in the creation or imposition of any lien, charge, pledge, security
interest, encumbrance, assessment or adverse claim (a "Lien") upon any part of
the property of Seller pursuant to any provision of, any material contract,
indenture, mortgage, lease, license, Lien, or other agreement or instrument to
which Seller is a party or by which it is bound, or (iv) violate or conflict
with any provision of the bylaws or articles of incorporation of the Seller as
amended to the date of this Agreement.
2.3. Ownership of Subsidiary. Seller's sole operating subsidiary is
UMSI, a Delaware corporation. The authorized capital stock of UMSI consists of
100 shares of UMSI Common, par value $20.00 per share. No other classes of
capital stock of UMSI are authorized. As of the date hereof, one share of UMSI
Common is issued and outstanding, and no other shares of capital stock of UMSI
are issued and outstanding. All outstanding shares of UMSI Common have been duly
authorized and are validly issued, fully paid and nonassessable. No shares of
capital stock have been reserved for any purpose. UMSI has no Rights authorized,
issued or outstanding with respect to the capital stock of UMSI. Seller is the
sole holder of 100% of the issued and outstanding capital stock of UMSI, free
and clear of all Liens, encumbrances, charges, defaults, pledges or equitable
interests other than the Lien of BancFirst. UMSI is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Virginia with full corporate power and authority to carry on its
business as it is currently being conducted in any other state of the United
States or foreign jurisdiction where such failure would have a material adverse
effect on the financial condition, results of operations, business or business
prospects of UMSI.
2.4. Authorization; Validity and Effect of Transaction Documents -
UMSI. The execution and delivery of this Agreement and all other Transaction
Documents by UMSI, and the consummation by it of the Transactions have been duly
authorized by all requisite corporate action. This Agreement and the Transaction
Documents which are to be executed and delivered by UMSI, when executed and
delivered pursuant hereto, will constitute the valid and legally binding
obligations of UMSI, enforceable in accordance with their respective terms
(subject to receipt of approval of the Unico Common Holders of this Agreement
and the Plan of Merger). The execution and delivery of this Agreement and any
other Transaction Document does not, and the consummation of the Transactions
will not: (i) require the consent of any third party (other than the approval of
Seller's shareholders of this Agreement and the Plan of Merger and the consent
of BancFirst), (ii) violate any statute or law or any rule,
25
<PAGE> 7
regulation, order, writ, injunction, arbitration award, or decree of any
Governmental Authority or require any authorization, consent, approval,
exemption or other action by or notice to any Governmental Authority; (iii)
result in the breach of any term or provision of, or constitute a default under,
or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or the lapse of time or both) any obligation under,
or result in the creation or imposition of any Lien upon any part of the
property of UMSI pursuant to any provision of, any material contract, indenture,
mortgage, lease, license, Lien, or other agreement or instrument to which UMSI
is a party or by which it is bound, or (iv) violate or conflict with any
provision of the bylaws or articles of incorporation of UMSI as amended to the
date of this Agreement.
2.5. Assets and Contract Rights. Seller has no significant assets other
than the UMSI Shares and its contract rights pursuant to this Agreement and the
other Transaction Documents.
2.6. Litigation. Other than as provided in Schedule 2.6, there are no
actions, suits, investigations, inquiries or other proceedings with respect to
Seller or UMSI involving claims by or against Seller or UMSI which are pending
or threatened against any such entity, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality regarding Seller's ownership of the UMSI
Shares, Seller's business or UMSI's business.
2.7. Interested Party Transactions. No current or former officer,
director, or shareholder of Seller, or any family member of any such natural
person: (a) is owed or will be owed any debt by UMSI, either directly or
indirectly; (b) is indebted or will be indebted to UMSI; or (c) is, directly or
indirectly, interested in any contract of UMSI or any other entity now owning or
which has owned in the past calendar year any assets of UMSI, other than Mr.
Gerard Bernier, in respect of whom UMSI has executed an employment agreement and
an indemnification in connection with a line of credit established for the
benefit of UMSI.
2.8. Securities Filings; Statements True.
2.8.1. Seller has timely filed all reports, proxy statements,
registration statements and all similar documents (the "Securities Documents")
filed, or required to be filed, pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended,
the Investment Company Act of 1940, as amended, the Trust Indenture Act of 1939,
as amended, and the rules and regulations of the Securities and Exchange
Commission (the "SEC") promulgated thereunder (collectively, the
26
<PAGE> 8
"Securities Laws") since January 1, 1995, with the exception of Seller's annual
report on Form 10-K for fiscal year 1997 that was filed with the SEC on April
16, 1998. Seller has provided to Buyer a true and complete copy of each
Securities Document filed by Seller with the SEC that Seller was required to
file during such period. As of their respective dates of filing, such Securities
Documents complied with the Securities Laws as then in effect, and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
2.8.2. The consolidated balance sheets of Seller as of
December 31, 1997, 1996 and 1995, and the related consolidated statements of
income, shareholders' equity and cash flows (including related notes and
schedules, if any) for each of the three years ended December 31, 1997, 1996 and
1995, as filed by Seller in Securities Documents and the consolidated balance
sheets of Seller (including related notes and schedules, if any) and the related
consolidated statements of income, changes in shareholders' equity and cash
flows (including related notes and schedules, if any) including in Securities
Documents filed by Seller with respect to periods ended subsequent to December
31, 1997 (collectively, the "Financial Statements") fairly present or will
fairly present, as the case may be, the consolidated financial position of
Seller and UMSI as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and statements of cash flows for the
periods then ended (subject, in the case of unaudited interim statements, to the
absence of notes and to normal year-end audit adjustments that are not material
in amount or effect) in conformity with U.S. generally accepted accounted
principles on a consistent basis.
2.8.3. No statement, certificate, instrument or other writing
furnished or to be furnished hereunder by Seller or UMSI contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
2.9. Adverse Change. Since December 31, 1997, Seller and UMSI have not
incurred any liability except as disclosed in the most recent Seller Financial
Statements, or entered into any transactions with affiliates, in each case other
than in the ordinary course of business consistent with past practices, nor has
there been any adverse change or any event involving a prospective adverse
change in the business, financial condition or results of operations of Seller
or of UMSI. All liabilities (including contingent liabilities) of Seller and
UMSI are
27
<PAGE> 9
disclosed in the most recent Financial Statements of Seller or were incurred in
the ordinary course of business since the date of Seller's most recent Financial
Statements.
2.10. Loans. All of the loans on the books of Seller and UMSI are valid
and properly documented, and were made in the ordinary course of business.
Neither the terms of such loans, nor any of the loan documentation, nor the
manner in which such loans have been administered and serviced, violates any
federal, state or local law, rule, regulation or ordinance applicable thereto.
Attached at Schedule 2.10 is (a) a summary of all outstanding material debt
obligations of Seller including the name and address of each creditor, the
outstanding principal and interest owed as of the date hereof and the material
terms of such debt obligation, and (b) a copy of written evidence from BancFirst
that BancFirst will not object to the Transactions, consents to the acquisition
of UMSI by Buyer, releases Seller from its obligations in regard to its debt to
BancFirst and agrees to the assumption by Buyer of such obligations in regard to
the debt of Seller to BancFirst.
2.11. Taxes. Other than as described on Schedule 2.11, Seller and UMSI
have timely filed (or requests for extensions have been timely filed and any
such extensions have been granted and have not expired) all federal, state and
local (and, if applicable, foreign) tax returns required by applicable law to be
filed by them and have paid, or where payment is not required to have been made,
have set up an adequate reserve or accrual for the payment of, all taxes
required to be paid in respect of the period covered by such returns and will
have paid, or where payment is not required to have been made, will have set up
an adequate reserve or accrual for the payment of, all taxes for any subsequent
periods ending on or prior to the Closing Date. Neither Seller nor UMSI will
have any liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established. All federal, state and local (and, if
applicable, foreign) tax returns filed by Seller and UMSI are complete and
accurate. Neither Seller nor UMSI is delinquent in the payment of any tax,
assessment or governmental charge.
2.12. Compliance with Laws. Each of Seller and UMSI is in compliance
with all statutes and regulations, and has obtained and maintained all permits,
licenses and registrations applicable to the conduct of its business, and
neither Seller nor UMSI has received notification (a) asserting a violation or
possible violation of any such statute or regulation, (b) threatening to revoke
any permit, license, registration or other government authorization, or (c)
restricting or in any way limiting its operations.
2.13. No Brokers. Neither Seller nor UMSI has entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Buyer, Seller or UMSI to pay any finder's fees, brokerage
or agent's commissions
28
<PAGE> 10
or other like payments in connection with the negotiations leading to this
Agreement and the other Transaction Documents or the consummation of the
Transactions, and Seller is not aware of any claim or basis for any claim for
payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement and the
other Transaction Documents or the consummation of the Transactions.
2.14. Certain Information. When the proxy statement is mailed, and at
the time of the meeting of Seller's shareholders to vote upon this Agreement and
the Plan of Merger, the proxy statement and all amendments and supplements
thereto, with respect to all information set forth therein provided by Seller,
(a) shall comply with the applicable provisions of the Securities Laws and (b)
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
2.15. Insurance. Set forth in Schedule 2.15 is a complete list of
insurance policies that Seller maintains with respect to itself and/or UMSI,
together with a copy of the declarations page of each such policy setting forth,
with respect to each policy, the amount and type of coverage, limits and
deductibles, inception and expiration dates and insurance carrier. Such policies
are in full force and effect.
2.16. Employees. Set forth in Schedule 2.16 is an accurate and complete
list of the names of all persons employed by UMSI ("Employees"), together with
the following information with respect to each Employee: base compensation and
department. Except as set forth in Schedule 2.16, no Employee has given notice
to terminate his or her employment, nor has any Employee threatened to give
notice of termination. Except as set forth in Schedule 2.16, neither Seller nor
UMSI has promised or agreed to give any Employee a pay raise or any additional
compensation other than with respect to a review in the ordinary course of
business consistent with past practice. Schedule 2.16 also sets forth the names
of all Employees with whom Seller or UMSI has entered into an employment
agreement and/or a non-compete agreement, as well as the material terms of any
such agreement.
2.17. Employee Benefit Plans; ERISA Compliance. With respect to each
employee benefit plan, as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and every other fringe
benefit, stock option, bonus, incentive compensation, deferred compensation,
excess, supplemental executive compensation, employee stock purchase, vacation,
sickness or disability, severance or separation, restricted stock or other
employee benefit plan, policy or arrangement, whether written or oral,
maintained or contributed to within the last five years by UMSI or by a Common
Control
29
<PAGE> 11
Entity (as defined below) for the benefit of Employees or former employees or
under which UMSI has or may have any liability or obligation (the "Benefit
Plans") maintained by UMSI or any corporation or other trade or business under
common control with UMSI (as determined under Section 414(b) or (c) of the Code,
a "Common Control Entity"): (i) there is no actual or contingent liability under
Title IV of ERISA or the Code to any person or entity, including the Pension
Benefit Guaranty Corporation, the IRS, any such plan or the participants (or
their beneficiaries) in any such plan; (ii) the assets of UMSI have not been
subject to a lien under ERISA or the Code; and (iii) there is no basis for such
liability or the assertion of any such lien with respect to the assets of UMSI
as the result of or after the consummation of the transactions contemplated by
this Agreement. UMSI and each Common Control Entity has at all times complied
with the continuation of coverage requirements of Section 601 through 609 of
ERISA and Section 4980B of the Code ("COBRA"). No Benefit Plan provides health,
dental, life insurance or other welfare benefits (whether on an insured or
self-insured basis) to Employees or former employees after their retirement or
other termination of employment from UMSI (other than continuation coverage
required under COBRA which may be purchased at the sole expense of the employee
or former employee).
2.18. Employee Relations. For the past three years, neither Seller nor
UMSI has engaged in any unfair labor practice with respect to any Employees or
former employees; no unfair labor practice complaint has been brought or is
pending before the National Labor Relations Board with respect to any Employees
or former employees; there has been no labor strike, dispute, slowdown or
stoppage involving any Employees or former employees, nor is there any now
pending or threatened; no representation question has been raised or now exists
respecting Employees or former employees; neither Seller nor UMSI has been
notified of any material grievance, and no arbitration proceeding arising out of
or under any collective bargaining agreement has been brought or is pending with
respect to any Employees or former employees; and neither Seller nor UMSI has
been or is a party to any collective bargaining agreement.
2.19. Suppliers. Except as set forth in Schedule 2.19, no supplier of
the Seller or UMSI has, in the six months prior to the date hereof, given
written notice to Seller or UMSI to cancel or otherwise terminate or reduce, or
given such notice orally or threatened to cancel, terminate or reduce, its
relationship with Seller or UMSI other than in the ordinary course of business
consistent with past experience.
2.20. Environmental Laws. Neither Seller nor USMI has received any
notification that: Hazardous Materials (as defined below) have been generated,
used, treated or stored at, or transported to or from, any real property used in
UMSI's business; Hazardous Materials have been released or disposed of on any
such property; or Seller or UMSI is not in compliance with
30
<PAGE> 12
applicable Environmental Laws and the requirements of any permits issued under
such Environmental Laws with respect to any such property, nor have any of the
foregoing events occurred. There are no pending or threatened claims, suits,
demands, investigations, proceedings or other actions relating to any
Environmental Law with respect to any such property. For purposes of this
Agreement, "Environmental Laws" shall mean any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, permit, policy or order now in
effect and in each case as amended to date and any judicial or administrative
interpretation thereof relating to Hazardous Materials, environmental matters,
the protection of public health and safety from environmental or health concerns
or otherwise relating to environmental conditions; and "Hazardous Materials"
shall mean all hazardous substances, wastes, materials or constituents, solid
wastes, special wastes, toxic substances, pollutants, contaminants, petroleum or
petroleum derived substances or wastes, radioactive materials, urea
formaldehyde, polychlorinated biphenyls, radon gas and related materials,
including, without limitation, any such materials defined, listed, identified
under or described in any Environmental Laws.
2.21. No Misrepresentation or Omission. No representation or warranty
by Seller or UMSI in this Section 2 or in any other section of this Agreement,
or in any certificate or other document furnished or to be furnished by Seller
or UMSI pursuant hereto, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading.
The representations and warranties of Seller and UMSI set forth above (other
than in Sections 2.1., 2.2., 2.3., 2.4. and 2.8.) shall survive the Closing for
a period of three years. The representations and warranties of Seller and UMSI
set forth in Sections 2.1., 2.2., 2.3., 2.4. and 2.8.), and the covenants of
Seller and UMSI set forth herein shall survive the Closing indefinitely.
3. Representations and Warranties of Buyer. Buyer and Newco each represents and
warrants to Seller as follows:
3.1. Capital Structure, Organization, Standing and Authority. The
authorized capital stock of Buyer consists of 50,000,000 shares of NexGen
Common, par value $0.01 per share, and 1,000,000 shares of preferred stock, par
value $0.001 per share ("NexGen Preferred") of which Buyer has designated two
series, the "Series A Preferred Stock" and the "Series B Preferred Stock." No
other classes of capital stock of Seller are authorized. As of the date hereof,
3,113,450 shares of NexGen Common, 250,000 shares of Series A Preferred Stock
and 70,000 shares of Series B Preferred Stock are issued and outstanding, and no
other shares of capital stock of Buyer are issued and outstanding. All
outstanding shares of NexGen Common
31
<PAGE> 13
and NexGen Preferred have been duly authorized and are validly issued, fully
paid and nonassessable. Except as set forth on Schedule 3.1, Buyer has no Rights
authorized, issued or outstanding with respect to the capital stock of Buyer.
Holders of NexGen Common do not have preemptive rights. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Nevada. Newco is a corporation duly incorporated, validly existing and
in good standing under the laws of the Commonwealth of Virginia. Buyer owns all
of the issued and outstanding shares of capital stock of Newco.
3.2. Authorization; Validity and Effect of Transaction Documents. The
execution and delivery of this Agreement and all other Transaction Documents by
each of Buyer and Newco, and the consummation by it of the Transactions, have
been duly authorized by all requisite corporate action. This Agreement
constitutes, and all other Transaction Documents to be executed and delivered by
Buyer, when executed and delivered pursuant hereto, will constitute, the valid
and legally binding obligations of Buyer, enforceable in accordance with their
respective terms. The execution and delivery of this Agreement and the other
Transaction Documents does not, and the consummation of the Transactions will
not, (i) require the consent of any third party, (ii) violate any statute or law
or any rule, regulation, order, writ, injunction, arbitration award or decree of
any Governmental Authority or require any authorization, consent, approval,
exemption or other action by or notice to any Governmental Authority, (iii)
result in the breach of any term or provision of, or constitute a default under,
or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or the lapse of time or both) any obligation under,
or result in the creation or imposition of any Lien upon any part of the
property of Buyer pursuant to any provision of, any material contract,
indenture, mortgage, lease, license, Lien, or other agreement or instrument to
which Buyer is a party or by which it is bound, or (iv) violate or conflict with
any provision of the bylaws or articles of incorporation of Buyer, as amended to
the date of this Agreement.
3.3. Investment Intent. Buyer is acquiring the UMSI Shares for Buyer's
own account for investment with no present intention of distributing or
reselling any such Shares with a view to any distribution within the meaning of
the Securities Act, and Buyer will not, directly or indirectly, voluntarily
offer, sell, pledge or otherwise dispose of (or solicit any offers to purchase
or otherwise acquire or take a pledge of) any UMSI Shares, except as
contemplated by the Pledge Agreement, unless (i) registered pursuant to the
provisions of the Securities Act or (ii) an exemption from registration is
available under the Securities Act.
3.4. Litigation. There are no actions, suits, investigations, inquiries
or other proceedings with respect to
32
<PAGE> 14
Buyer or Newco involving claims by or against Buyer or Newco which are pending
or threatened against any such entity, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality regarding Buyer's or Newco's business.
3.5 Securities Filings; Statements True.
3.5.1. Buyer has timely filed all Securities Documents filed,
or required to be filed, pursuant to the Securities Laws since February 6, 1997
with the exception of an amended current report and an amended quarterly report
to be filed, respectively, on Form 8-K and Form 10-Q to update timely filed
reports to include certain pro forma data concerning Buyer's acquisition of
certain assets of Pompton Valley Publishing Company, Inc. on September 29, 1997,
which such reports shall be filed with the SEC prior to the Closing. Buyer has
provided or will provide prior to the Closing to Seller a true and complete copy
of each Securities Document filed by Buyer with the SEC that Buyer was required
to file during such period. As of their respective dates of filing, such
Securities Documents complied with the Securities Laws as then in effect, and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.5.2. The consolidated balance sheet of Buyer as of December
31, 1997, and the related consolidated statements of income, shareholders'
equity and cash flows (including related notes and schedules, if any) for the
year ended December 31, 1997, as filed by Buyer in Securities Documents and the
consolidated balance sheets of Buyer (including related notes and schedules, if
any) and the related consolidated statements of income, changes in shareholders'
equity and cash flows (including related notes and schedules, if any) including
in Securities Documents filed by Buyer with respect to periods ended subsequent
to December 31, 1997 (collectively, the "Financial Statements") fairly present
or will fairly present, as the case may be, the consolidated financial position
of Buyer as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity and statements of cash flows for the periods
then ended (subject, in the case of unaudited interim statements, to the absence
of notes and to normal year-end audit adjustments that are not material in
amount or effect) in conformity with U.S. generally accepted accounted
principles on a consistent basis.
3.5.3. No statement, certificate, instrument or other writing
furnished or to be furnished hereunder by Buyer contains or will contain any
untrue statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
33
<PAGE> 15
3.6. Adverse Change. Since December 31, 1997, Buyer has not incurred
any liability except as disclosed in the most recent Buyer Financial Statements,
or entered into any transactions with affiliates, in each case other than in the
ordinary course of business consistent with past practices, nor has there been
any adverse change or any event involving a prospective adverse change in the
business, financial condition or results of operations of Buyer. All liabilities
(including contingent liabilities) of Buyer are disclosed in the most recent
Financial Statements of Buyer or were incurred in the ordinary course of
business since the date of Buyer's most recent Financial Statements.
3.7. Taxes. Buyer's sole operating subsidiary, Independent News Inc.
("INI"), has timely filed (or requests for extensions have been timely filed and
any such extensions have been granted and have not expired) all federal, state
and local (and, if applicable, foreign) tax returns required by applicable law
to be filed by it and has paid, or where payment is not required to have been
made, has set up an adequate reserve or accrual for the payment of, all taxes
required to be paid in respect of the period covered by such returns and will
have paid, or where payment is not required to have been made, will have set up
an adequate reserve or accrual for the payment of, all taxes for any subsequent
periods ending on or prior to the Closing Date. Buyer will not have any
liability for any such taxes or in excess of the amounts so paid or reserves or
accruals so established. All federal, state and local (and, if applicable,
foreign) tax returns filed by Buyer are complete and accurate. INI and, to the
best of Buyer's knowledge, Buyer are not delinquent in the payment of any tax,
assessment or governmental charge.
3.8. Compliance with Laws. Buyer is in compliance with all statutes and
regulations, and has obtained and maintained all permits, licenses and
registrations applicable to the conduct of its business, and Buyer has not
received notification (a) asserting a violation or possible violation of any
such statute or regulation, (b) threatening to revoke any permit, license,
registration or other government authorization, or (c) restricting or in any way
limiting its operations.
3.9. No Brokers. Buyer has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
Buyer, Seller or UMSI to pay any finder's fees, brokerage or agent's commissions
or other like payments in connection with the negotiations leading to this
Agreement and the other Transaction Documents or the consummation of the
Transactions, and Buyer is not aware of any claim or basis for any claim for
payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement and the
other Transaction Documents or the consummation of the Transactions.
34
<PAGE> 16
3.10. Certain Information. When the proxy statement is mailed to
Seller's shareholders, and at the time of the meeting of Seller's shareholders
to vote upon this Agreement and the Plan of Merger, the proxy statement and all
amendments and supplements thereto, with respect to all information set forth
therein provided by Buyer (a) shall comply with the applicable provisions of the
Securities Laws and (b) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances in which
they were made, not misleading.
3.11. Material Contracts. Set forth in Schedule 3.11 is a list of all
material contracts entered into by Buyer since February 6, 1997. Buyer has
furnished to Seller copies of all material contract listed on Schedule 3.11
prior to the execution of this Agreement.
3.12. Employee Relations. Buyer has not engaged in any unfair labor
practice with respect to any Employees or former employees; no unfair labor
practice complaint has been brought or is pending before the National Labor
Relations Board with respect to any Employees or former employees; there has
been no labor strike, dispute, slowdown or stoppage involving any Employees or
former employees, nor is there any now pending or threatened; no representation
question has been raised or now exists respecting Employees or former employees;
Buyer has not been notified of any material grievance, and no arbitration
proceeding arising out of or under any collective bargaining agreement has been
brought or is pending with respect to any Employees or former employees; and
Buyer has not been or is not a party to any collective bargaining agreement.
3.14. Suppliers. No supplier of the Buyer has, in the six months prior
to the date hereof, given written notice to Buyer to cancel or otherwise
terminate or reduce, or given such notice orally or threatened to cancel,
terminate or reduce, its relationship with Buyer other than in the ordinary
course of business consistent with past experience.
3.15. Environmental Laws. Buyer has not received any notification that:
Hazardous Materials have been generated, used, treated or stored at, or
transported to or from, any real property used in Buyer's business; Hazardous
Materials have been released or disposed of on any such property; or Buyer is
not in compliance with applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws with respect to any such property,
nor have any of the foregoing events occurred. There are no pending or
threatened claims, suits, demands, investigations, proceedings or other actions
relating to any Environmental Law with respect to any such property.
3.16. No Misrepresentation or Omission. No
35
<PAGE> 17
representation or warranty by Buyer in this Section 3 or in any other Section of
this Agreement, or in any certificate or other document furnished or to be
furnished by Buyer pursuant hereto, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
The representations and warranties of Buyer and Newco set forth above (other
than in Sections 3.1., 3.2. and 3.5.) shall survive the Closing for a period of
three years. The representations and warranties of Buyer and Newco set forth in
Sections 3.1., 3.2., and 3.5.), and the covenants of Buyer and Newco set forth
herein shall survive the Closing indefinitely.
4. Other Covenants and Agreements.
4.1. Indemnification by Seller. Upon the terms and subject to the
conditions set forth in Section 4.3 hereof and this Section 4.1, Seller agrees
to indemnify and hold Buyer and Newco harmless against, and will reimburse Buyer
(or Newco if Buyer so requests) on demand for, any payment, loss, cost or
expense (including reasonable attorney fees and reasonable costs of
investigation incurred in defending against such payment, loss, cost or expense
or claim therefor) made or incurred by or asserted against Buyer or Newco at any
time after the Closing Date in respect of any omission, misrepresentation,
breach of warranty, or nonfulfillment of any term, provision, covenant or
agreement on the part of Seller or UMSI contained in this Agreement, or from any
misrepresentation in, or omission from, any certificate or other instrument
furnished or to be furnished by Seller or UMSI to Buyer pursuant to this
Agreement.
4.2. Indemnification by Buyer. Upon the terms and subject to the
conditions set forth in Section 4.3 hereof and this Section 4.2, Buyer agrees to
indemnify and hold Seller harmless against, and will reimburse Seller on demand
for, any payment, loss, cost or expense (including reasonable attorney fees and
reasonable costs of investigation incurred in defending against such payment,
loss, cost or expense or claim therefor) made or incurred by or asserted against
Seller at any time after the Closing Date in respect of any omission,
misrepresentation, breach of warranty, or nonfulfillment of any term, provision,
covenant or agreement on the part of Buyer contained in this Agreement, or from
any misrepresentation in, or omission from, any certificate or other instrument
furnished or to be furnished by Buyer to Seller pursuant to this Agreement.
4.3. Conditions of Indemnification. With respect to any actual or
potential claim, any written demand, the commencement of any action, or the
occurrence of any other event which involves any matter or related series of
matters (a "Claim") against which a party hereto is indemnified (the
"Indemnified Party") by the other party (the "Indemnifying Party") under
36
<PAGE> 18
Section 4.1 or 4.2 hereof:
4.3.1. Promptly after the Indemnified Party first receives
written documents pertaining to the Claim, or if such Claim does not involve a
third party Claim (a "Third Party Claim"), promptly after the Indemnified Party
first has actual knowledge of such Claim, the Indemnified Party shall give
notice to the Indemnifying Party of such Claim in reasonable detail and stating
the amount involved, if known, together with copies of any such written
documents.
4.3.2. If the Claim involves a Third Party Claim, then the
Indemnifying Party shall have the right, at its sole cost, expense and ultimate
liability regardless of the outcome, and through counsel of its choice (which
counsel shall be reasonably satisfactory to the Indemnified Party), to litigate,
defend, settle or otherwise attempt to resolve such Third Party Claim; provided,
however, that if in the Indemnified Party's reasonable judgment a conflict of
interest may exist between the Indemnified Party and the Indemnifying Party with
respect to such Third Party Claim, then the Indemnified Party shall be entitled
to select counsel of its own choosing, reasonably satisfactory to the
Indemnifying Party, in which event the Indemnifying Party shall be obligated to
pay the fees and expenses of such counsel. Notwithstanding the preceding
sentence, the Indemnified Party may elect, at any time and at the Indemnified
Party's sole cost, expense and ultimate liability, regardless of the outcome,
and through counsel of its choice, to litigate, defend, settle or otherwise
attempt to resolve such Third Party Claim. If the Indemnified Party so elects
(for reasons other than the Indemnifying Party's failure or refusal to provide a
defense to such Third Party Claim), then the Indemnifying Party shall have no
obligation to indemnify the Indemnified Party with respect to such Third Party
Claim, but such disposition will be without prejudice to any other right the
Indemnified Party may have to indemnification under Section 4.1 or 4.2 hereof,
regardless of the outcome of such Third Party Claim. If the Indemnifying Party
fails or refuses to provide a defense to any Third Party Claim, then the
Indemnified Party shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim, through counsel of its choice, on behalf
of and for the account and at the risk of the Indemnifying Party, and the
Indemnifying Party shall be obligated to pay the costs, expenses and attorney
fees incurred by the Indemnified Party in connection with such Third Party
Claim. In any event, Buyer and Seller shall fully cooperate with each other and
their respective counsel in connection with any such litigation, defense,
settlement or other attempted resolution.
37
<PAGE> 19
4.4. Taxes and Expenses.
4.4.1. Seller covenants and agrees to pay any and all taxes on
the transfer to Buyer of the UMSI Shares. Except as otherwise specifically
provided for in this Agreement, Seller will assume and pay all costs,
liabilities and other obligations incurred by Seller in connection with the
performance of and compliance with all Transactions and other agreements and
conditions contained in this Agreement and the other Transaction Documents to be
performed or complied with by Seller, including legal and accounting fees. To
the extent that such costs, together with other cost, liabilities and other
obligations of Seller are not paid by Seller in the ordinary course and exceed
the Debt Pay-Off Consideration ninety days following the Closing Date, such
excess costs shall become an obligation of the Surviving Corporation.
4.4.2. Except as otherwise specifically provided for in this
Agreement, Buyer will assume and pay all costs, liabilities and other
obligations incurred by Buyer in connection with the performance of and
compliance with all Transactions and other agreements and conditions contained
in this Agreement and the other Transaction Documents to be performed or
complied with by Buyer, including legal and accounting fees.
4.5. Proprietary Information.
4.5.1. Seller covenants and represents that from and after the
Closing, Seller and its affiliates will not have any interest in, or claim to,
any patents, trademarks, trade names, service marks, copyrights or applications
therefor, or licenses to use any of the foregoing, or designs, methods,
inventories or know-how related thereto (collectively "Business Property
Rights") owned or held by UMSI, and all such Business Property Rights which are
necessary to, or used in the conduct of UMSI's business, and all knowledge or
information of a confidential nature acquired at or before the Closing Date with
respect to the UMSI and its business will be held in confidence by Seller and
will not be disclosed or made public, except for the benefit of Buyer or UMSI,
or made use of by or through Seller, directly or indirectly.
4.5.2. Seller, on its own behalf and on behalf of its
affiliates, acknowledges that a breach of subsection 4.5.1. hereof would cause
irreparable damage to Buyer, and in the event of Seller's actual or threatened
breach of the provisions of subsection 4.5.1. hereof, Buyer shall be entitled to
a temporary restraining order and an injunction restraining such Seller from
breaching such covenants without the necessity of posting bond or proving
irreparable harm, such being conclusively admitted by Seller. Nothing shall be
construed as prohibiting Buyer from pursuing any other available remedies for
such breach or threatened breach, including the recovery of damages.
38
<PAGE> 20
4.6. Operation of the Business. Except as contemplated herein or as
otherwise consented to by Buyer in writing, prior to the Closing Seller will,
and will cause UMSI to:
4.6.1. Use its best efforts to keep UMSI intact and not take
or permit to be taken or do or suffer to be done anything other than in the
ordinary course of the business of UMSI as presently conducted, including
without limitation incurring any contractual obligation outside the ordinary
course of the business as presently conducted, and to maintain the goodwill
associated with the business;
4.6.2. Not take any action that could result in the breach of
any of the representations, warranties or covenants of Seller or UMSI pursuant
to this Agreement, or that could cause any of the representations, warranties or
covenants of Seller or UMSI not to be true and correct in all material respects
immediately after such action or on the Closing Date; and
4.6.3. Recommend to the Unico Common Holders to vote in favor
of the Merger which will result in the sale of the UMSI Shares, Seller's sole
significant asset.
4.7. Access for Due Diligence Investigation. To the extent within
Seller's and Buyer's ability and control, each of the parties hereto have
afforded, and until the Closing, shall continue to afford, to the other parties
hereto and their respective representatives (including, without limitation,
directors, officers, employees, investment bankers, accountants, counsel, and
other advisors) full access during normal business hours to all of the assets,
books, and records of such party and such other information with regard to such
party as any other party hereto may from time to time request, and to make
copies of such books, records and other documents and to discuss the business of
such party with such persons (including, without limitation, directors,
officers, employees, accountants, counsel, suppliers, customers and creditors)
as each of the other parties hereto deems necessary or appropriate for making a
due diligence investigation of the other parties hereto. Buyer and Seller shall
coordinate contact with third parties concerning their due diligence
investigations.
4.8. Notification of Certain Events.
4.8.1. Each party shall give prompt notice to the other
parties hereto of (i) the occurrence, or failure to occur, of any event that
could cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate at any time from the date hereof to the
Closing Date or which if known as of the date hereof would have been required to
be disclosed to the other parties hereto, and (ii) any failure of such party to
comply with any covenant, condition, or agreement to be complied with or
satisfied by it under this Agreement.
39
<PAGE> 21
4.8.2. Each party shall give prompt notice to the other
parties hereto of any determination by it that an event described in clause
4.8.1.(i) or (ii) could reasonably be expected to interfere with the Closing on
the scheduled Closing Date.
4.9. Permits and Consents. Seller and Buyer agree to cooperate and use
their best efforts to obtain any license, permit, authorization or approval (a
"Permit"), and to make any registration, declaration, or filing, required to be
obtained or made with any Governmental Authority or any other person or entity,
to consummate the Transactions. This covenant shall survive the Closing.
4.10. UCC and Lien Searches. Buyer shall, at its sole cost and expense,
obtain copies of written reports of UCC and judgment lien searches in each
jurisdiction in which Seller or UMSI is organized or in which assets thereof are
located, such reports to be dated within ten days of the Closing Date. Seller
and UMSI represent and warrant that all of the assets of Seller and UMSI are
located in Fairfax County, Virginia.
4.11. Seller Shareholder Meeting; Registration Statement; Proxy
Statement/Prospectus. As promptly as practicable after the date hereof, Buyer
shall prepare and file a registration statement under the Securities Act with
the SEC. Seller will furnish to Buyer the information required to be included in
the registration statement with respect to the business and affairs of Seller
and UMSI before it is filed with the SEC and again before any amendments are
filed. Buyer shall use its best efforts to cause such registration statement to
be declared effective under the Securities Act. The registration statement shall
include the form of proxy statement/prospectus. Buyer and Seller shall use their
best efforts to cause the proxy statement/prospectus to be approved by the SEC
for mailing to the Seller's shareholders. Seller shall cause the proxy
statement/prospectus to be mailed to and call for a vote of its shareholders of
record in accordance with all applicable notice requirements under the
Securities Laws and the VSCA.
5. Conditions of Closing.
5.1. Buyer's and Seller's Conditions of Closing. The obligation of
Buyer to purchase and pay for the UMSI Shares, and the obligation of Seller to
sell the UMSI Shares shall be subject to and conditioned upon the satisfaction
at the Closing of each of the following conditions:
5.1.1. Any and all Permits from third parties and Governmental
Authorities required to consummate the Transactions shall have been obtained.
5.1.2. No suit, action, investigation, inquiry or other legal
or administrative proceeding by any Governmental
40
<PAGE> 22
Authority or other person shall have been instituted or threatened which
questions the validity or legality of the Transactions or which could reasonably
be expected to adversely affect the ability of Buyer to consummate such
Transactions.
5.1.3. Buyer's registration statement (including any
post-effective amendments thereto) shall be effective under the Securities Act,
and Buyer shall have received all state securities or "Blue Sky" permits or
other authorizations, or confirmations as to the availability of an exemption
from registration requirements as may be necessary, and no proceedings shall be
pending or to the knowledge of Buyer threatened by the SEC or any state "Blue
Sky" securities administration to suspend the effectiveness of such registration
statement, and the NexGen Common to be issued as contemplated in the Plan of
Merger shall have either been registered or be subject to exemption from
registration under applicable state securities laws.
5.1.4. As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the Transactions or
any of them not be consummated as so provided, or imposing any material
conditions on the consummation of such Transactions by Seller or Buyer.
5.1.5. The parties hereto shall have executed and delivered to
the other parties hereto all other Transaction Documents and shall have received
and delivered to the other parties the following documents:
a. Written evidence by Buyer of the consummation of
its acquisition of 100% of the subordinated debt of Seller and the Unico Series
C Preferred, and contemporaneous cancellation of the subordinated debt of Seller
to Buyer and waiver of all rights of the Unico Series C Preferred other than
voting and conversion rights;
b. Written evidence from BancFirst that BancFirst
will not object to the Transactions, consents to the acquisition of UMSI by
Buyer, releases Seller from its obligations in regard to its debt to BancFirst
and agrees to the assumption by Buyer of such obligations in regard to the debt
of Seller to BancFirst;
c. A stock purchase and shareholder agreement between
Messrs. Joel Sens ("Sens") and Gerard Bernier ("Bernier") providing for, among
other things, an agreement between Sens and Bernier concerning the structure of
Buyer's board of directors upon consummation of the Transactions;
d. Employment agreements between Bernier and each of
Buyer and the Surviving Corporation for the appointment of Bernier as CEO of
each such corporation;
41
<PAGE> 23
e. A consulting agreement between Buyer and Sens
providing for the engagement of Sens as a consultant to Buyer;
f. Stock option agreements between Buyer and each of
Sens and Kenneth Brochin ("Brochin") providing for 150,000 stock options,
exercisable at $0.50 per share for a term of ten years from the date of their
issuance to acquire one share per option of NexGen Common, for each of Sens and
Brochin;
g. A stock purchase agreement among Buyer, Bernier,
Gerald Bomstad ("Bomstad") and Leon Zajdel ("Zajdel") providing for the exchange
of Unico Common of each of Bernier, Bomstad and Zajdel for shares of NexGen
Common at a ratio of ten shares of Unico Common per share of NexGen Common;
h. The cancellation of certain indebtedness of the
Buyer to certain shareholders of Buyer, and the cancellation of certain
indebtedness of certain shareholders of Buyer to Buyer;
i. Evidence of the reservation of 100,000 shares of
NexGen Common by Buyer's board of directors for awards to key employees of Buyer
and/or UMSI by Buyer's board of directors; and
j. Evidence of a restructuring of Buyer's loan from
KeyBank National Association to extend repayment past January 1, 2000, and Buyer
shall undertake its best efforts to reduce substantially the debt prior to
maturity.
5.2. Buyer's Conditions of Closing. The obligation of Buyer to purchase
and pay for the UMSI Shares shall be subject to and conditioned upon the
satisfaction at the Closing of each of the following conditions:
5.2.1. All representations and warranties of Seller and UMSI
contained in this Agreement and the other Transaction Documents shall be true
and correct at and as of the Closing Date, Seller shall have performed all
agreements and covenants and satisfied all conditions on its part required to be
performed or satisfied by the Closing Date pursuant to the terms of this
Agreement, and Buyer shall have received a certificate of the Seller dated the
Closing Date to such effect.
5.2.2. Seller shall have delivered to Buyer certificates of
each of Seller's and UMSI's corporate Secretary certifying:
(i) Resolutions of its Board of Directors authorizing
execution and delivery of this Agreement and the other Transaction
Documents and the performance of all Transactions; and
(ii) The incumbency of its officers executing this
Agreement and all other Transaction Documents executed
42
<PAGE> 24
on Seller's behalf.
5.2.3. Seller shall have delivered to Buyer certificates of
the Secretary of State of Delaware and the Virginia Corporation Commission
certifying as of a date reasonably close to the Closing Date that each of Seller
and UMSI, respectively, has filed all required reports, paid all required fees
and taxes, and is, as of such date, in good standing and authorized to transact
business as a domestic corporation.
5.2.4. Seller shall have delivered the stock and minute book
of UMSI and the written resignations, effective on the Closing Date, of all
members of the Board of Directors and all officers of UMSI, and shall have
caused all persons who have been designated by Buyer to be duly elected as
directors and officers of UMSI.
5.2.5. Seller shall have delivered to Buyer certificates and
other instruments representing all the UMSI Shares issued and outstanding, duly
endorsed for transfer or accompanied by appropriate stock powers (in either case
executed in blank or in favor of Buyer), together with all other documents
necessary or appropriate to validly transfer the UMSI Shares to Buyer free and
clear of all Liens.
5.2.6. There shall not have occurred any material adverse
change in the business, client relations, operations, properties, prospects,
assets or condition of UMSI, and no event shall have occurred or circumstance
shall exist that has specific application to UMSI (other than general economic
or industry conditions) that could reasonably be expected to result in such a
material adverse change.
5.3. Seller's Conditions of Closing. The obligation of Seller to sell
the UMSI Shares shall be subject to and conditioned upon the satisfaction at the
Closing of each of the following conditions:
5.3.1. All representations and warranties of Buyer contained
in this Agreement and the other Transaction Documents shall be true and correct
at and as of the Closing Date, Buyer shall have performed all agreements and
covenants and satisfied all conditions on its part required to be performed or
satisfied by the Closing Date pursuant to the terms of this Agreement, and
Seller shall have received a certificate of Buyer dated the Closing Date to such
effect.
5.3.2. Buyer shall have delivered to Seller a certificate of
its corporate Secretary certifying:
(i) Resolutions of its Board of Directors authorizing
execution of this Agreement and the execution, performance and delivery
of all agreements, documents and
43
<PAGE> 25
transactions contemplated hereby; and
(ii) The incumbency of its officers executing this
Agreement and all agreements and documents contemplated hereby.
5.3.3. Buyer shall have delivered the Merger Consideration as
provided for in Section 2 herein on the Closing Date.
6. Miscellaneous.
6.1. Notice. Any notice or other communication required or permitted
hereunder shall be in writing and personally delivered, mailed by registered or
certified mail (return receipt requested and postage prepaid), sent by telegram
(with messenger service specified), sent by telecopier (with a confirming copy
sent by regular mail), or sent by prepaid overnight courier service, and
addressed to the relevant party at its address set forth below, or at such other
address as such party may, by written notice, designate as its address for
purposes of notice hereunder.
(a) If to Buyer, at:
Next Generation Media Corp.
900 North Stafford, Suite 2003
Arlington, VA 22203
Telecopy: (703) 516-9888
With a copy (which shall not constitute notice) to:
Jonathan P. Graham, Esq.
Williams & Connolly
725 12th Street, N.W.
Washington, D.C. 20005
Telecopy: (202) 434-5029
(b) If to Seller, at:
UNICO, Inc.
8380 Alban Road
Springfield, VA 22150
Telecopy: (703) 913-0425
With a copy (which shall not constitute notice) to:
Matthew A. Clary III, Esq.
Clary & Moore
10306 Eaton Place, Suite 240
Fairfax, VA 22030
Telecopy: (703) 359-9499
44
<PAGE> 26
Notice shall be effective immediately upon personal delivery or telecopy, seven
(7) business days after deposit in the mail, or one (1) business day after
deposit with a telegraph company or overnight courier service.
6.2. Termination.
6.2.1. Right of Termination Without Breach. This Agreement may
be terminated without further liability of any party at any time prior to the
Closing by mutual written agreement of the parties. Without the mutual written
agreement of the parties hereto, this Agreement will terminate on December 31,
1998.
6.2.2. Termination for Breach.
(i) Termination By Buyer. If there has been a
material breach by Seller or UMSI of any of Seller's or UMSI's agreements,
representations or warranties contained in this Agreement which has not been
waived in writing by Buyer, then Buyer may, by written notice to Seller at any
time prior to the Closing that such breach is continuing, terminate this
Agreement with the effect set forth in Section 6.2.2. (iii) hereof.
(ii) Termination By Seller. If there has been a
material breach by Buyer of any of Buyer's agreements, representations or
warranties contained in this Agreement which has not been waived in writing by
Seller, then Seller may, by written notice to Buyer at any time prior to the
Closing that such breach is continuing, terminate this Agreement with the effect
set forth in Section 6.2.2. (iii).
(iii) Effect of Termination. Termination of this
Agreement pursuant to this Section 6.2.2. shall not in any way terminate, limit
or restrict the rights and remedies of any party hereto against any other party
which has breached or failed to perform any of the representations, warranties,
covenants, or agreements of this Agreement prior to termination hereof.
6.3 Disclosures and Announcements. Both the timing and the content of
all disclosures to third parties (other than disclosures to agents acting on
behalf of Buyer or Seller for purposes of conducting their respective due
diligence investigation) and public announcements concerning the transactions
provided for in this Agreement by either Seller or Buyer shall be subject to the
approval of the other in all essential respects until the Closing following
which the specific terms of the Transaction Documents shall remain confidential
between the parties, except to the extent that disclosure of such terms is
required under applicable laws or regulations.
6.4. Further Assurances. Each party will do such acts, and execute and
deliver to any other party such additional documents or instruments as may be
reasonably requested in order to effect
45
<PAGE> 27
the purpose of this Agreement and the other Transaction Documents and to better
assure and confirm unto the requesting party its rights, powers and remedies
hereunder and thereunder.
6.5. Binding Effect; No Assignment. This Agreement and the other
Transaction Documents shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding the
foregoing, no party shall assign any of its rights or delegate any of its
obligations under any Transaction Document without the prior written consent of
the other parties thereto, which may be withheld at their respective discretion.
6.6. Entire Agreement. This Agreement and the other Transaction
Documents constitute the full and entire understanding and agreement among the
parties with regard to their respective subject matters and supersede any and
all prior written or oral agreements, understandings, representations and
warranties made with respect thereto. No amendment, supplement or modification
of this Agreement or any other Transaction Document nor any waiver of any
provision hereof or thereof shall be made except in writing executed by all
parties hereto or thereto.
6.7. Governing Law. THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF VIRGINIA, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS. Each of the parties hereto (a) agrees that any legal suit,
action or proceeding arising out of or relating to this Agreement will be
instituted exclusively in the state courts of Virginia or in the United States
District Court for the Eastern District of Virginia, (b) waives any objection
which such party may have now or hereafter to the venue of any such suit, action
or proceeding, and (c) irrevocably consents to the jurisdiction of the state
courts of Virginia and the United States District Court for the Eastern District
of Virginia in any such suit, action or proceeding. Each party further agrees to
accept and acknowledge service of any and all process which may be served in any
such suit, action or proceeding in such courts and agrees that service of
process upon such party mailed by certified mail to the party's address
specified pursuant to Section 6.1 will be deemed in every respect effective
service of process upon such party in any such suit, action or proceeding.
6.8. Survival. All representations, warranties, indemnities, covenants
and agreements made by the parties to this Agreement and the other Transaction
Documents shall survive the execution of this Agreement and the Closing.
Notwithstanding any investigation conducted before the date of this Agreement or
the Closing, or the decision of any party to execute this Agreement or proceed
to Closing, each party shall be entitled to rely on the representations and
warranties of the other party set forth
46
<PAGE> 28
herein or in any other Transaction Document.
6.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
6.10. Interpretation. No provision of this Agreement or any other
Transaction Document shall be interpreted or construed against any party because
that party or its legal representative drafted such provision. The titles of the
paragraphs of this Agreement and other Transaction Documents are for convenience
of reference only and are not to be considered in construing this Agreement or
the relevant Transaction Document. For all purposes of this Agreement and the
other Transaction Documents, unless the context otherwise requires or as
otherwise expressly provided, (a) all defined terms shall include both the
singular and the plural forms thereof; (b) reference to any gender shall include
all other genders; (c) all references to words such as "herein", "hereof", and
the like shall refer to this Agreement as a whole and not to any particular
Article or Section within this Agreement; (d) the term "include" means "include
without limitation"; and (e) the term "or" is intended to include the term
"and/or".
6.11. No Waiver; Remedies Cumulative. No waiver by any party hereto of
any one or more defaults by any other party or parties in the performance of any
of the provisions of this Agreement shall operate or be construed as a waiver of
any future default or defaults, whether of a like or different nature. No
failure or delay on the part of any party in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any party hereto at law, in equity or
otherwise.
6.12. Incorporation of Exhibits. All exhibits and schedules attached
hereto are by this reference incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
6.13. Severability. If any term, covenant or condition of this
Agreement, or the application of such term, covenant or condition to any party
or circumstance shall be found by a court of competent jurisdiction to be, to
any extent, invalid or unenforceable, the remainder of this Agreement and the
application of such term, covenant, or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law. Upon determination that any
such term
47
<PAGE> 29
is invalid, illegal or unenforceable, the parties hereto shall amend this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner.
6.14. Stand Still. Except with the written consent of both Buyer and
Seller, each of the parties hereto, covenants that between the date hereof and
the Effective Time, other than as provided for in the Transaction Documents,
neither it nor any of its subsidiaries shall:
a. carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, or
establish or acquire any new subsidiary or engage in any new activity;
b. declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock;
c. issue any shares of its capital stock;
d. issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like change
in capitalization;
e. amend its articles of incorporation or bylaws; impose or
permit imposition of any lien, charge or encumbrance on any share of stock held
by it in any subsidiary, or permit such lien, charge or encumbrance to exist; or
waive or release any material right or cancel or compromise any debt or claim,
in each case other than in the ordinary course of business;
f. merge with any other entity or permit any other entity to
merge into it, or consolidate with any other entity; acquire control over any
other entity; or liquidate, sell or otherwise dispose of any assets or acquire
any assets, other than in the ordinary course of its business consistent with
past practices;
g. fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to the
conduct of its business;
h. increase the rate of compensation of any of its directors,
officers or employees, or pay or agree to pay any bonus to, or provide any other
employee benefit or incentive to, any of its directors, officers or employees;
i. enter into any material agreement, arrangement or
commitment not made in the ordinary course of business;
j. dispose of any material assets other than in the ordinary
course of business; or
k. agree to do any of the foregoing.
48
<PAGE> 30
6.15 Execution Date. On the date of the execution of this Agreement,
Buyer shall enter into, among others, the agreements referred to in subsections
5.1.5.(a) and 5.1.5.(c). Buyer shall have immediately available funds of
approximately $350,000 to complete the transaction referred to in subsection
5.1.5.(a) on the same date as the date of the execution of this Agreement. Buyer
will use the remainder of such funds (i) to cause to be paid to BancFirst a
"curtail fee" in order for the parties to receive the document referred to in
subsection 5.1.5.(b) prior to the Closing; (ii) to pay certain outstanding
obligations of Buyer mutually agreed upon by Buyer and Seller; and (iii) to
provide the balance to Seller in the form of a working capital loan that Seller
shall use for repayment of certain debt of Seller to UMSI upon terms to be
established between Buyer and Seller.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]
49
<PAGE> 31
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first set forth above.
NEXT GENERATION MEDIA
CORP. (BUYER)
By: /s/ Larry Grimes
----------------------------
Lawrence Grimes
President
UNITED MARKETING MERGER
CORP. (NEWCO)
By: /s/ Larry Grimes
----------------------------
Lawrence Grimes
President
UNICO, INC. (SELLER)
By: /s/ Gerard Bernier
----------------------------
Gerard Bernier
President
UNITED MARKETING SOLUTIONS INC.
(UMSI)
By: /s/ Gerard Bernier
----------------------------
Gerard Bernier
President
50
<PAGE> 32
ANNEX A
PLAN OF MERGER
OF
UNITED MERGER INC.
WITH AND INTO
UNITED MARKETING SOLUTIONS INC.
Section 1. Corporations Proposing to Merger and Surviving Corporation.
United Marketing Merger Corp., a Virginia corporation ("Newco") shall be merged
(the "Merger") with and into United Marketing Solutions Inc., a Virginia
corporation ("UMSI"), pursuant to the terms and conditions of this Plan of
Merger and of the Stock Purchase Agreement dated as of May 8, 1998 (the
"Agreement"), by and among Next Generation Media Corp., a Nevada Corporation and
parent corporation of Newco ("Buyer"), Unico Inc., a Delaware corporation and
parent corporation of UMSI ("Seller"), UMSI and Newco. The effective time for
the Merger (the "Effective Time") shall be set forth in the Articles of Merger
to be filed with the Clerk of the State Corporation Commission of the
Commonwealth of Virginia. UMSI shall continue as the surviving corporation (the
"Surviving Corporation") in the Merger and the separate corporate existence of
Newco shall cease.
Section 2. Effects of the Merger. The Merger shall have the effect set
forth in section 13.1-721 of the Virginia Stock Corporation Act (the "VSCA").
Section 3. Articles of Incorporation and Bylaws. The Articles of
Incorporation and the Bylaws of UMSI as in effect immediately prior to the
Effective Time shall remain in effect as the Articles of Incorporation and
Bylaws of the Surviving Corporation following the Effective Time until changed
in accordance with their terms and the VSCA.
Section 4. Conversion of Shares. At the Effective Time, each share of
the common stock of UMSI issued and outstanding immediately prior to the
Effective Time shall continue to be issued and outstanding, and each share of
the common stock of Newco issued and outstanding immediately prior to the
Effective Time shall cease to continue to be issued and outstanding.
Section 5. Merger Consideration. As used herein, the term "Merger
Consideration" shall mean the shares of Buyer's common stock (rounded to the
nearest whole number) and, if applicable, cash, as provided herein. No
fractional shares of Buyer's common stock will be issued as part of the Merger
Consideration.
5.1. Buyer agrees to pay the purchase price in the form of (a)
200,000 shares of Buyer's common stock, par value $0.01 ("NexGen Common")
divided ratably (and rounded to the nearest
51
<PAGE> 33
whole share) among the holders of the common stock of Seller (the "Merger
Consideration") and (b) up to $150,000 cash (the "Debt Pay-Off Consideration,"
and, together with the Merger Consideration, the "Purchase Price") for the
payment of debts of Seller to the extent that creditors of Seller (other than
BancFirst, an Oklahoma banking corporation ("BancFirst")) do not consent to the
assignment of such debt by Seller, the assumption of such debt by Buyer and the
release of Seller in respect of such debt by such creditor. The Merger
Consideration shall be paid to the holders of Seller's issued and outstanding
common stock, par value $0.01 per share ("Unico Common), provided, however, that
the Merger Consideration will not be paid to Buyer for any shares of Unico
Common held by Buyer. The Debt Pay-Off Consideration shall be paid to Seller.
The Merger Consideration may be adjusted according to the following:
5.2. At the time of the vote of the holders of Seller's
capital stock on the Merger, the holders of Seller's common stock ("Unico Common
Holders") who shall receive Merger Consideration, may elect to receive cash in
lieu of NexGen Common. If any Unico Common Holder so elects, Buyer shall pay to
each Unico Common Holder so electing a cash component of the Merger
Consideration equal to $0.10 multiplied by the number of shares of Unico Common
held by such Unico Common Holder.
5.3 If any Unico Common Holder votes to receive cash in lieu
of NexGen Common, the Unico Common Holders that do not so elect shall receive
their ratable shares of the Merger Consideration in NexGen Common as if all
Unico Common Holders were receiving NexGen Common for their ratable share of the
Merger Consideration.
Section 6. Amendment. At any time before the Effective Time, this Plan
of Merger may be amended, provided that: (i) any such amendment is approved by
the Board of Directors of UMSI and Newco; and (ii) no such amendment made
subsequent to the submission of this Plan of Merger to the shareholders of UMSI
and the shareholders of Seller shall have any of the effects specified in
section 13.1-718.1 of the VSCA without the approval of the shareholders affected
thereby.
52
<PAGE> 34
The undersigned, Presidents of each of UMSI and Newco, declare that the
facts herein stated are true as of May 8, 1998.
UNITED MARKETING SOLUTIONS INC.
By: /s/ Gerard Bernier
----------------------------
Name: Gerard Bernier
Title: President
UNITED MARKETING MERGER CORP.
By: /s/ Larry Grimes
----------------------------
Name: Lawrence Grimes
Title: President
53
<PAGE> 1
EXHIBIT 2.4
STOCK PURCHASE AND SHAREHOLDERS AGREEMENT
THIS AGREEMENT, entered into as of the 12th day of May, 1998, by and
among Gerard R. Bernier (the "Purchaser"), Joel P. Sens (the "Seller") and
Lawrence Grimes, Kenneth Brochin, David Grossman and Jeffrey Sens (collectively
referred to as the "Seller's Associates").
WITNESSETH:
WHEREAS, Seller is currently the majority and controlling stockholder
of Next Generation Media Corporation, a Nevada Corporation, ("NexGen"); and
WHEREAS, Seller's Associates are also stockholder's in or Officers or
Directors of or are otherwise interested in NexGen and Seller; and
WHEREAS, Contemporaneous with the execution hereof NexGen is entering
into a definitive agreement to acquire United Marketing Solutions, Inc., a
Virginia corporation (referred to herein as "United" and the "United
Acquisition"), whose current President and Chief Executive Officer is the
Purchaser; and
WHEREAS, Seller and Seller's Associates are desirous of inducing
Purchaser, in connection with the United Acquisition, to continue as the
President and Chief Executive Officer of United and to assume the office of
Director and Chief Executive Officer of NexGen and for such purposes are
desirous of entering into this agreement; and
WHEREAS, Seller owns, of record and beneficially, 2,045,929 shares of
the issued and outstanding shares of commons stock of NexGen, representing
Sixty-Four and 9/10ths percent (64.9%) of the issued and outstanding shares of
common stock (computed on a fully diluted basis); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, Nine Hundred Thirty-Five Thousand (935,000) shares of the
aforesaid NexGen Common Stock owned by Seller (the "Shares") upon the terms and
conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the mutual promises and
representations herein set forth and for other good and valuable consideration,
the parties agree as follows:
1. Sale and Transfer of Shares: Upon and subject to the terms and conditions set
forth in this Agreement, Seller agrees to sell, assign, and transfer the Shares
to Purchaser, free and clear of liens, charges, encumbrances, equities, claims,
and options of any kind.
2. Purchase Price: Subject to the terms and conditions of this
54
<PAGE> 2
Agreement, in reliance upon the representations, warranties and agreements of
Seller and Seller's Associates contained herein, and in consideration of the
aforesaid sale, assignment and delivery of the Shares, Purchaser shall at the
Closing (as defined herein) pay to Seller the amount of One Hundred Fifty-Six
Thousand, One Hundred Forty-Five and No/100 Dollars ($156,145) (the "Purchase
Price") in the form of a Non-Recourse Secured Promissory Note, payable in
twenty-four (24) equal installments of principal and interest (the "Purchaser's
Note"). The Purchaser's Note shall bear interest at the rate of 5.83% per annum.
The Purchaser's Note shall be transferred by Seller to NexGen in satisfaction of
$156,145 of that certain note from Seller to NexGen in the principal amount of
$359,050 ("Seller's Note") that is secured by certain of Seller's common stock
in NexGen, including the Shares.
3. Closing: The purchase and sale of the Shares (the "Closing") shall take place
within ten (10) days of the execution of this Agreement and prior to the
effective date of the United Acquisition (the "United Closing Date") or as
otherwise agreed by the parties. Prior to the Closing, Seller and Seller's
Associates shall have caused the NexGen approval recited in paragraph 13(b)(4)
hereof to have been obtained to consummate the transactions contemplated in this
agreement. At Closing, Seller shall deliver to Purchaser all certificates
representing the Shares, properly endorsed or accompanied by stock powers duly
executed in blank for transfer on the books of NexGen.
4. Resignations and Management Participation Upon Closing: Upon Closing, Seller
shall deliver to Purchaser a written resignation of Seller as a Director and
Officer of NexGen. Seller further represents and warrants that, upon Closing, he
shall relinquish all rights, in any capacity whatsoever, to participate in the
management, operation, conduct or control of NexGen and its subsidiaries'
day-to-day operations, without the specific authorization of Purchaser.
5. Appointment and Election of Purchaser as Director and President: Upon the
United Closing Date, Seller and Seller's Associates shall cause Purchaser to be
elected as a Director of NexGen and appointed as NexGen's President and Chief
Executive Officer ("CEO"). As compensation for assuming the office of NexGen's
President and Chief Executive Officer, Seller and Seller's Associates shall
cause NexGen to issue Purchaser options to purchase 150,000 shares of NexGen
common stock at an exercise price of $.50 per share valid for ten years from the
date of issue. Seller's and Seller's Associates' agreements to cause Purchaser
to be appointed or elected as a director and CEO of NexGen, as set forth in this
paragraph 5, shall continue in full force and effect so long as Purchaser is
employed by NexGen or United.
6. Purchaser as Consultant: To facilitate an efficient
55
<PAGE> 3
implementation of the NexGen/United business plan, Seller and Seller's
Associates shall cause Purchaser to be appointed a consultant to NexGen
contemporaneous with the execution hereof until the United Closing Date. As
compensation for and to induce Purchaser to accept such appointment as
consultant, Seller and Seller's Associates shall cause NexGen to cancel and
forgive the Purchaser's Note and to pay to Purchaser, compensation in an amount
equal to the income tax obligations incurred by Purchaser as a consequence of
the aforesaid cancellation and forgiveness of Purchaser's Note. As such
consultant, Purchaser shall oversee the prompt implementation of all preparatory
actions contemplated in the NexGen/United business plan approved by the NexGen
Board of Directors.
7. Appointment and Election of Additional Directors; Insurance: In addition to
the provisions of Paragraph 5 hereof, upon Closing, the NexGen Board of
Directors shall have five seats, one of which shall be vacant because of the
resignation of Seller. Seller's Associates shall (i) cause three additional
directors from among the Seller's Associates to resign by the United Closing
Date; (ii) appoint and elect two designees of Purchaser as Directors by the
United Closing Date; (iii) cause a designee of the holders of the NexGen Series
A Preferred Stock to be appointed and elected as a Director (the "Series A
Director") after the Closing; and (iv) appoint and elect a person mutually
selected by the holders of the NexGen Series A Preferred Stock and Purchaser as
an independent Director, initially identified hereby as Steven Kronzek (the
"Independent Director") by the United Closing Date. As and when the Series A
Preferred Stock is redeemed or converted to NexGen common stock and the rights
of the holders thereof to nominate and elect a Director have been terminated,
the parties agree (i) to seek the resignation of the Series A Director and the
Independent Director; (ii) to appoint and elect a designee of Seller as a
Director to fill the vacancy created by the resignation of the Series A
Director; and (iii) to then mutually select an agreed upon independent Director
to replace the Independent Director. In addition, Purchaser and Seller agree to
cause NexGen to obtain directors' and officers' insurance no later than as and
when the common stock of NexGen is listed on any stock exchange. The parties'
agreements, as set forth in this paragraph 7, shall continue in full force and
effect so long as Purchaser is employed by NexGen or United. The parties hereto
agree to vote their shares of stock in NexGen, if necessary, at any shareholder
meeting in order to effectuate the purposes of this paragraph 7.
8. Cancellation of Debt: At Closing, Seller and Seller's Associates agree to the
following cancellations of indebtedness between each of Seller and Seller's
Associates and NexGen:
(a) Seller will owe $202,905 on the Seller's Note upon
transfer of the Shares to Purchaser. NexGen owes Seller $37,198.91 in working
capital advanced by Seller. Seller and
56
<PAGE> 4
NexGen will net these obligations in the amount of $15,000, resulting in
outstanding debts of $187,905 owed by Seller to NexGen and $22,198.91 owed by
NexGen to Seller. In satisfaction of NexGen's debt to Seller, Seller shall
accept NexGen common stock in lieu of payment at a sale price of $0.334 per
share, resulting in the issuance (rounded to the nearest whole share) of 66,464
shares of NexGen common stock to Seller. NexGen, in recognition of Seller's
contribution to the business shall forgive $152,905 of Seller's debt to NexGen
and pay to Seller as a special bonus, cash in an amount sufficient for Seller to
pay income tax due on this cancellation of indebtedness. Seller will owe NexGen
$35,000 remaining on Seller's Note.
(b) NexGen owes Kenneth Brochin, one of Seller's Associates
("Brochin"), $35,000 in working capital advanced by Brochin. Brochin agrees to
accept, in payment of NexGen's debt to him, transfer of the remaining balance of
Seller's Note in the amount of $35,000.
(c) NexGen owes Lawrence Grimes, one of Seller's Associates,
and W.B. Grimes & Co. (collectively, "Grimes"), $6,255 in working capital and
$17,500 in commissions, respectively. Grimes hereby agrees to release NexGen
from such obligations which such obligations Seller hereby agrees to assume and
for which Seller shall exchange such debt for 71,123 shares of NexGen common
stock.
9. Capital Infusion/Lock Up Agreement/Payment of Certain NexGen Obligations:
(a) Seller agrees to cause additional working capital in the
sum of $210,000 to be obtained as a result of equity investments in NexGen, at a
minimum price of $1.00 per share, prior to the United Closing Date.
Alternatively, Seller may make a no-interest loan to NexGen in said amount,
repayable only as and when such capital, together with additional capital
necessary to pay the costs incurred in connection with the United Acquisition
are also obtained. The proceeds of raising such capital or loan of $210,000
shall be to loaned to Unico on the same terms provided for in Section 6.15 of
the Stock Purchase Agreement and Plan of Merger executed contemporaneously
herewith for working capital referred to in such Section 6.15. Purchaser agrees
to use up to $50,000 from the $210,000 in equity capital raised to pay
additional legal fees of NexGen incurred by a law firm agreed to by Purchaser
relating to the preparation of an S-4 registration statement. In the event that
Seller fails to obtain the $210,000 in equity capital or make the loan described
herein within the time recited, then Seller shall surrender to NexGen shares of
NexGen common stock that he owns equal to the deficiency, valuing such shares
for purposes hereof at $0.50 per share. Purchaser shall have the option to
purchase such shares from NexGen at the aforesaid price of $0.50 per share.
57
<PAGE> 5
(b) Seller represents and warrants that:
(1) Upon the Closing, Seller shall own 1,248,516
shares of NexGen common stock.
(2) Except as provided for in subparagraph
9(b)(3), Seller shall not sell, transfer or
otherwise dispose of any of Seller's NexGen
common stock until the earlier of (i) two
years from the Closing or (ii) the time when
all of the 250,000 shares of NexGen's Series
A Preferred stock and 70,000 shares of
Series B Preferred stock issued in
connection with the United Acquisition is
either redeemed or converted to common
stock.
(3) Notwithstanding subparagraph 9(b)(2), Seller
may sell up to (i) 150,000 shares of NexGen
common stock held by Seller to the persons
and in the amounts provided for in Exhibit A
hereto and (ii) 150,000 shares of NexGen
common stock held by Seller in private
transactions and in compliance with
applicable securities laws; provided, that
Seller may not sell any of the stock
provided for in subparagraph 9(b)(3)(ii)
until the payment of $48,267.49 in debt owed
by NexGen's subsidiary, Independent News
Inc. ("INI"), to certain employees of INI
(the "INI Debt"); and, provided, further,
that Seller may use the proceeds of the sale
of stock provided for in subparagraph
9(b)(3)(ii) to lend to NexGen an amount
sufficient to pay the INI Debt.
(c) Seller covenants that Seller shall be responsible for
providing sufficient funds, through a sale of Seller's NexGen common stock as
provided for in subparagraph 9(b)(3), through a loan by Seller to NexGen or by
causing NexGen to sell newly issued common stock (at a price no less than $1.00
per share), to cause NexGen to pay the INI Debt within 30 days of the execution
of this Agreement and thereafter up to $50,000 of existing NexGen legal fees.
Any funds advanced to NexGen by Seller to pay the INI Debt or the existing legal
fees shall be evidenced by a note from NexGen to Seller to provide for repayment
of the funds advanced plus interest. Principal and interest shall be due at the
time of repayment which shall be the earlier of (i) two years from the Closing
or (ii) the time when all of the 250,000 shares of NexGen's Series A Preferred
stock and 70,000 shares of Series B Preferred stock issued in connection with
the United Acquisition is either redeemed or converted to common stock. The note
shall bear interest at the applicable federal rate as
58
<PAGE> 6
provided for in section 1274(d) of the Internal Revenue Code, as amended, based
on the term of the note, as determined at the time of repayment. In lieu of such
payment, Seller may elect to receive NexGen Common stock at an exchange rate
equal to the sale price Seller obtained for his stock.
(d) Notwithstanding the provisions of Paragraph 9(c) above,
Purchaser agrees that Seller may provide for the payment of the INI Debt and the
existing legal fees of NexGen contemporaneous with the provision of $210,000 in
working capital to United by causing NexGen to sell newly issued shares of
common stock at a price no less than $1.00 per share, provided however, that the
proceeds of such sales shall be applies: 1st to the payment of the INI Debt, 2nd
to the $210,000 in working capital to United, 3rd to the payment of NexGen's
obligations pursuant to the Merger Agreement, and 4th to the aforesaid legal
fees.
10. Representations and Warranties of Seller and Seller's Associates: Seller and
Seller's Associates represents and warrants to Purchaser as follows:
(a) As of the date hereof and as of the Closing, Seller's
ownership of NexGen stock is and shall be as set forth in the Recitals and
Paragraph 1 hereof.
(b) Seller acquired the Shares for investment for his own
account and his own beneficial interest and not for the account or interest of
any other person or persons and had, at the time he acquired the Shares, no
present intention of reselling or otherwise distributing the Shares, but rather
intended to hold the Shares as a long-term investment. Seller has not offered or
agreed to sell his Shares through any advertisement or general solicitation,
instrumentality of interstate commerce or the mail.
(c) Seller and Seller's Associates have the power and
authority to execute, deliver and perform this Agreement and to consummate the
transaction intended hereby. This Agreement and all such other agreements and
obligations entered into and undertaken in connection with the transaction
contemplated hereby, constitute the valid and legally binding obligations of
Seller and Seller's Associates, enforceable against Seller and Seller's
Associates in accordance with their respective terms. Except as provided herein,
no consent, approvals or waivers are required to be obtained in connection with
Seller's or Seller's Associates performance of the transaction contemplated
hereby. The execution and performance of this Agreement does not conflict, or
constitute breach of or result in a default under any contract or indenture to
which Seller or Seller's Associates is a party or to which any of them is
subject.
59
<PAGE> 7
(d) No commission, finder's fee or other consideration of any
kind is being paid by any party to any entity or person in connection with this
Agreement.
(e) No representation or warranty by Seller or Seller's
Associates in this Agreement, or any schedule hereto, contains or shall contain
any untrue statement or omit to state a material fact.
11. Representations and Warranties of Purchaser:
(a) The Purchaser is acquiring the Shares for his own account
for investment, with no present intention of reselling or otherwise distributing
the Shares. The certificates representing the Shares, when and if issued to the
Purchaser, shall bear a legend substantially as follows:
The Shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or
the securities acts of any state (the "Acts"). The Shares have
not been acquired with a view to, or in connection with, any
distribution thereof and may not be sold, pledged,
hypothecated, transferred or otherwise disposed of in the
absence of an effective registration statement for the shares
under the Acts or opinion of counsel in a form reasonably
acceptable to the Corporation that registration is not
required under such Acts.
(b) Purchaser has full power and authority to execute, deliver
and perform this Agreement.
12. Survival of Representation and Warranties: The covenants, agreements,
representations and warranties set forth in this Agreement shall survive the
Closing and shall not be affected by any investigation, verification, or prior
knowledge by any party hereto or by anyone on behalf of any such parties.
13. Conditions Precedent to Closing:
(a) Purchaser. The obligation of the Purchaser to consummate
the transactions contemplated hereby shall be subject to the following
conditions precedent having occurred at or prior to Closing:
(1) The representation and warranties made by
the Seller and Seller's Associates shall be
true and correct in all material respects as
of the Closing; and
60
<PAGE> 8
(2) The delivery by the Seller of the stock
certificates required by Paragraph 3.
(3) Fulfillment of the conditions specified in
Paragraphs 4, 5, 6 and 7 hereof, to the
extent that such conditions are to be
completed on or by the Closing.
(b) Seller and Seller's Associates. The obligations of the
Seller and Seller's Associates to consummate the transactions contemplated
hereby shall be subject to the following condition precedent having occurred at
or prior to Closing:
(1) The representation and warranties made by
the Purchaser shall be true and correct in
all material respects as of the Closing;
(2) The delivery by the Seller of the
Purchaser's Note in a form satisfactory to
the parties;
(3) Execution of the definitive agreement for
the United Acquisition; and
(4) Approval by NexGen of: (i) the transfer of
Shares to Purchaser in exchange for the
transfer of the Purchaser's Note from Seller
to NexGen; and (ii) the cancellation and
forgiveness of Purchaser's Note as set forth
in Paragraph 6 hereof; and (iii) the
reduction in the Seller's Note in an amount
equal to the Purchase Price.
14. Successors and Assigns; Joint and Several Liability: This Agreement shall be
binding on, and shall inure to the benefit of, the parties hereto and their
respective heirs, legal representatives, successors and assigns. The
representations, warranties, covenants and agreements of Seller and Seller's
Associates made herein shall be deemed to be jointly and severally made by
Seller. The liability of any Seller's Associate shall be limited to a breach of
his respective representations, warranties, covenants and agreements.
15. Validity of Agreement: In the event any provision, or portion thereof, of
this Agreement is held by a court having proper jurisdiction to be for any
reason unenforceable or invalid, the remaining provisions, or portions thereof,
of this Agreement shall continue to exist and shall remain in full force and
effect.
16. Other Agreements: This Agreement sets forth all of the promises, agreements,
conditions, understandings,
61
<PAGE> 9
warranties, and representations between the parties hereto with respect to the
Shares, and there are no other promises, agreements, conditions, understandings,
warranties, or representations, oral or written, express or implied, between
them with respect to the Shares. No change, amendment or modification of this
Agreement shall be valid unless in writing and signed by the parties hereto.
17. Specific Performance: The parties hereto agree that the Shares are unique,
that failure of Seller or Seller's Associates to consummate the sale and other
transactions intended hereby will result in irreparable damage to Purchaser, and
that specific performance of these obligations or any other applicable
equitable, legal, or other decree, order, writ, or remedy that shall require
performance by each of the parties or one or both of them, may be obtained by
suit in law or in equity.
18. Governing Law: This Agreement shall be construed in accordance with, and
governed by the laws of, the Commonwealth of Virginia.
19. Assignment: This Agreement may not be assigned by any party without the
prior written consent of all other parties hereto.
62
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first shown above.
SELLER:
/s/ Joel P. Sens
---------------------
Joel P. Sens
SELLERS ASSOCIATES:
/s/ Larry Grimes
---------------------
Lawrence Grimes
/s/ Kenneth Brochin
---------------------
Kenneth Brochin
/s/ David Grossman
---------------------
David Grossman
/s/ Jeffrey Sens
---------------------
Jeffrey Sens
BUYER:
/s/ Gerald Bernier
---------------------
Gerard R. Bernier
63
<PAGE> 11
Exhibit A
<TABLE>
<CAPTION>
NAME SHARES OF SELLER
- ---- ----------------
<S> <C>
Kenneth Brochin 30,000
Jeffrey Sens 25,000
Laurie Sens 25,000
Arthur Mosley 30,000
Darryl Reed 5,000
Michael Flammia 21,000
John Sutherland 2,000
John Ayele 2,000
Jean Coisman 10,000
TOTAL 150,000
=======
</TABLE>
64
<PAGE> 1
EXHIBIT 2.5
BILL OF SALE AND GENERAL RELEASE
For good and valuable consideration, receipt and sufficiency of which
is hereby acknowledged, and pursuant to a letter agreement, dated as of March
18, 1998 and amended by letter as of April 30, 1998 (the "Agreement"), between
Renaissance Capital Partners I ("Renaissance"), Duncan-Smith Investments Inc.
("Duncan-Smith") and Next Generation Media Corp. ("Seller") and intending to be
legally bound hereby, Seller does hereby unconditionally and irrevocably sell,
convey, assign and transfer to Renaissance, Duncan-Smith and the persons and
entities listed on Schedule A hereto (collectively, the "Buyers") consideration
in the amount of (1) $100,000 cash, (2) 250,000 shares of Seller's Series A
Preferred Stock, par value $0.001 (the "Series A Preferred") and (3) 166,667
stock purchase warrants exercisable for common stock of Seller at a price of
$0.16 per share (collectively the "Seller Consideration") in exchange for all of
each Buyer's (1) shares of Series C Preferred stock in UNICO, Inc. ("Unico"),
(2) subordinated debt owed to such Buyer by Unico, (3) and any claims (including
all outstanding warrants or options to purchase shares of Unico) and causes of
action as more fully described in the Agreement attached hereto as Schedule B
(collectively, the "Buyer Consideration").
Seller and Buyers, each hereby represents and warrants that (i) such
party has good and marketable title to the Seller Consideration or its portion
of the Buyer Consideration, respectively, free and clear of any option, pledge,
security interest, lien, charge, encumbrance, easement, adverse claim or
restriction, whether imposed by agreement, understanding, law or otherwise and
(ii) no agreements or understandings exist that limit or restrict the right of
Seller to transfer the Seller Consideration to Buyer or of Buyers to transfer
the Buyer Consideration to Seller, as the case may be.
Seller and the Buyers, for themselves and their respective successors
and assigns, hereby jointly and severally covenant and agree that, without
further consideration, at any time and from time to time after the date hereof,
they will execute and deliver to Buyers or to Seller, as the case may be, such
further instruments of sale, conveyance, assignment and transfer, and take such
other action, all upon the reasonable request of Seller or the Buyers, as the
case may be, in order more effectively to convey, assign, transfer and deliver
all or any portion of the Seller Consideration to Buyers and the Buyer
Consideration to Seller, and to assure and confirm to any other person the
ownership of the Seller Consideration by the Buyers and the Buyer Consideration
by Seller. Any Buyer that has filed a financing statement on form UCC-1 hereby
agrees to execute and deliver to Seller a release in the form of a UCC-3
termination statement for any such UCC-1 filed in Virginia, Fairfax County or
elsewhere.
The signatory for the Buyers hereby warrants and represents, by his
signature below that (1) he is acting on behalf of the
65
<PAGE> 2
Buyers pursuant to valid powers of attorney executed by each Buyer, (2)
Duncan-Smith Investments, Inc. has acted as "purchase representative," as
defined in Regulation D under the Securities of 1933, as amended (17 C.F.R.
Section 230.501(h) for each of the Buyers listed on Schedule A hereto and (3) he
has had the opportunity to ask any questions he may have about NexGen regarding
its assets, business and prospects based on past information that he has
received, copies of NexGen's 10-K for fiscal year 1997 or any other topic.
This bill of sale and general release may be executed in counterparts
and by facsimile signatures.
IN WITNESS WHEREOF, Seller and the Principal Shareholder have caused
this Bill of Sale and General Assignment to be executed this 8th day of May,
1998.
BUYERS
By: /s/ Goodhue Smith
-------------------------------------------
Name: Goodhue Smith, III
Title: Attorney-in-fact for the Buyers
SELLERS
By: /s/ Larry Grimes
-------------------------------------------
Name: Lawrence Grimes
Title: President, Next Generation Media Corp.
66
<PAGE> 3
List of Preferred C Shareholders and Subordinated Debt Holders
UNICO, Inc.
<TABLE>
<CAPTION>
NAME NEXGEN PREFERRED WARRANTS
- ---- ---------------- --------
<S> <C> <C>
1. Renaissance Capital Partners I*
2. Duncan-Smith Investments, Inc.*
3. Harlon Morse Fentress Trust*
4. Citcam Stock Company
5. Phillip M Stevenson, Jr.
6. RHOJCOAMT Partnership, Ltd.*
7. Barbara T. Grinnan*
8. Goose Creek*
9. Fred Grinstead*
10. Tres Hombres*
11. Eddie W. Spalton*
12. Jordon Reese, III*
13. Deborah Quebe*
14. Richard Oldfather*
15. Eleanor Morrison*
16. Mary L. Malone*
17. Thomas Lovett*
18. Johnnie Jean Lovett*
19. Jane Jacobs
20. Luella Hardie
21. Sally W. Duncan*
22. A. Baker Duncan*
23. M.A. Dizdar*
24. Dan E. Butt*
25. Beverly Arnold*
26. Comer M. Alden*
</TABLE>
26 purchasers, *22 of whom are accredited investors.
67
<PAGE> 1
EXHIBIT 2.6
ESCROW AGREEMENT
This agreement made and entered this 1st day of May 1998 by and between
Next Generation Media Corp., of 900 North Stafford Street, Suite 2003,
Arlington, Virginia 22203 (hereinafter "Seller") and T.C. Equities, Ltd., of
Charlotte House, Nassau, Bahamas (collectively hereinafter "Buyer"), Joel Sens
of 900 North Stafford Street, Suite 2003, Arlington, Virginia 22203 (hereinafter
"Sens") and the Law Office of Shane Henty Sutton P.C., a professional
corporation incorporated under the laws of the State of New York ("Escrow
Agent").
WHEREAS, Buyer agreed to purchase 70,000 shares of Redeemable
Cumulative Convertible Preferred Stock in the company called Next Generation
Media, Corp., and warrants (hereinafter "Shares") pursuant to an Agreement
dated, April 24, 1998; and
WHEREAS, pursuant to that Agreement Sens shall provide Buyer with a
controlling interest in UNICO, Inc., a Delaware Corporation;
WHEREAS, Seller, Buyer, Sens and the Escrow Agent desire to enter into
this Escrow Agreement to provide for the deposit and the disbursement of the
purchase price for the shares and the deposit and the delivery of the shares,
warrants subject to the terms and conditions of this Escrow Agreement.
WHEREAS, SUTTON is willing to act as Escrow Agent under this Agreement.
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
FUNDS TO BE PLACED IN ESCROW
Buyer shall on or before the closing date deliver the purchase price of
Three Hundred Fifty Thousand ($350,000.00) to the Escrow
Agent. The Escrow Agent shall deposit the funds into an
interest-bearing bank account in the name of the Escrow Agent
(the "Escrow Agent"), to be held in accordance with this
Escrow Agreement.
SECURITIES TO BE HELD IN ESCROW
Seller shall deliver a certificate(s) representing 70,000 shares of
Redeemable Cumulative Convertible Preferred Stock in the
company called Next Generation Media, Corp., with a redemption
price of $5.00 per share (hereinafter the "Securities") and a
face value of $350,000.00, along with Seller 250,000 warrants
for common stock in Next Generation Media Corp. Sens shall
also provide the Escrow Agent a fully executed Agreement for
the delivery of controlling interest in UNICO, Inc., a
Delaware corporation.
68
<PAGE> 2
RELEASE OF SHARES AND SETTLEMENT
3.1 Upon the later to occur of (a) receipt by the Escrow Agent of the
purchase price as described in section 1 herein, and (b) receipt by the Escrow
Agent of the certificates, warrants and agreement as described in section 2
herein, the Escrow Agent shall promptly pay over the purchase price (plus
interest accrued to the date of payment) to Seller in such manner as may be
reasonably requested by Seller, and shall promptly deliver the certificates,
warrants and agreements to Buyer by overnight courier service.
3.2 Notwithstanding the foregoing, in the event that the Escrow Agent has
not received either the purchase price or the certificates, warrants or
agreement as set forth hereinabove on or before the end of the closing date, as
defined in the Agreement, the Escrow Agent shall notify Buyer and Seller and
await instructions. If Escrow Agent has not received non-conflicting
instructions by the end of the closing date, the Escrow Agent shall promptly pay
over the purchase price (plus interest accrued to the date of payment) to the
Buyer, and/or shall promptly deliver the certificates, warrants and agreements
to Seller by overnight courier service, as the case may be.
DUTIES OF ESCROW AGENT
The sole duty of Escrow Agent, other than as hereinafter specified, shall
be to receive funds and Stock certificates, warrants and agreement as set forth
hereinabove and hold them subject to release in accordance with the terms and
conditions of this Agreement and shall be under no duty to make certain that
Seller and Buyer are complying with the laws of any jurisdiction that may apply
to any resale of Shares. The Escrow Agent shall undertake to perform only such
duties as are expressly set forth and no implied duties or obligations shall be
read into this Agreement against the Escrow Agent. The Escrow Agent may act in
reliance upon any writing or instrument, including any such writing or
instrument received by facsimile, or signature which it in good faith believes
to be genuine, may assume the validity and accuracy of any statement or
ascertain contained in such writing or instrument, and may assume that any
person purporting to give any writing, notice, advice, or instruction in
connection with the provisions hereof has been duly authorized to so do. The
Escrow Agent shall not be liable in any manner for the sufficiency or
correctness as to form, manner and execution, or the validity of any instrument
deposited in the Escrow Agreement. Its duties hereunder shall be limited to the
safekeeping of such instrument and monies received by it as the Escrow Agent,
and for the maintenance and disposition of the funds deposited with it in
accordance with this Escrow Agreement. The Escrow Agent shall not be liable for
collection items until the net proceeds of the same in actual cash have been
received, not shall it be liable for default in payment of negotiable documents
deposited. It may rely upon paper document or other writing believed by it to be
authentic in making any delivery of money or property hereunder.
69
<PAGE> 3
ESCROW AGENT'S LIABILITIES
The Escrow Agent's obligations and duties in connection herewith are
confined to those duties specifically enumerated in the Escrow Agreement. The
Escrow Agent shall not be in any manner liable or responsible for the
sufficiency, correctness, genuineness, or validity of any instruments deposited
with it or with reference to the form of execution thereof, or the identity,
authority, or rights of any person executing or depositing same, and the Escrow
Agent shall not be liable for any loss that may occur by reason of forgery,
false representations, or the exercise of its discretion in any particular
manner or for any other reason, except for its own negligence or willful
misconduct.
ESCROW AGENT AND LEGAL FEES
The Escrow Agent's fee herein shall be USD Two Thousand ($2,000.00)
Dollars. This fee is intended as full compensation for the Escrow Agent's
services as contemplated by this Escrow Agreement and shall be disbursed through
the proceeds of the transaction. The parties further authorize the disbursement
of legal fees to The Law Office of Shane Henty Sutton, P.C., through the
proceeds of the transaction as per a memorandum of costs to be provided by the
attorneys, with such costs not to exceed Eight Thousand ($8,000.00) Dollars.
BINDING AGREEMENT AND SUBSTITUTION OF ESCROW AGENT
The terms and conditions of this Agreement shall be binding on the heirs,
executors and assigns, creditors or transferees, or successors in interest,
whether by operation of law or otherwise, of the parties hereto. If for any
reason the Escrow Agent herein, should be unable or unwilling to continue as
such Escrow Agent, the other parties to this Agreement may substitute another
person to serve as Escrow Agent. No party may assign its rights or obligations
hereunder without the consent in writing of the other parties hereto.
MISCELLANEOUS
The parties covenant and agree that in performing any of its duties under
this Agreement, the Escrow Agent shall not be liable for any loss or damages
which may occasion as a result of serving as Escrow Agent hereunder, except for
any loss or damages occasioned by its willful default or negligence.
The Escrow Agent may, upon ten (10) days written notice, resign as Escrow
Agent, provided that such resignation shall not become effective until such time
as a successor Escrow Agent acceptable to Seller and Buyer has been appointed.
All notices and communications hereunder shall be in writing and shall be
deemed to be duly given and received if made by prepaid registered mail with
return receipt requested, courier, telecopier, telex, or telegraph to each of
the parties at the
70
<PAGE> 4
following respective addresses or such other addresses as may be set forth
in writing by a party and sent to all other parties.
The validity, interpretation, and performance of this Escrow Agreement
shall be controlled by and construed under the laws of the State of New
York, the state in which this Escrow Agreement is deemed executed and the
parties hereto submit to that State's jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first above written in New York.
/s/ Lawrence Grimes /s/ Peter G. Fletcher
- -------------------------------- --------------------------------
NEXT GENERATION MEDIA CORP. T.C. EQUITIES LTD.
/s/ Joel Sens
- --------------------------------
JOEL SENS
/s/ Shane Sutton
- --------------------------------
THE LAW OFFICE OF
SHANE HENTY SUTTON P.C.
By: Shane Henty Sutton, Esq.
71
<PAGE> 1
EXHIBIT 2.7
STOCK PURCHASE AGREEMENT
This Agreement of sale and purchase (hereinafter "Agreement") is made
and entered into as of the 4th day of May, 1998, by and between Joel Sens
(hereinafter "Seller"), UNICO, a Delaware Corporation ("UNICO"), and T.C.
Equities, Ltd., a Bahamas corporation ("Buyer").
WHEREAS, Seller and Buyer have entered into a Securities Subscription
Agreement whereupon Buyer shall subscribe to a total of 70,000 shares of Next
Generation Media Corp., a Nevada Corporation, ("Nexgen") and that to induce
Buyer to enter into such Agreement, Seller has agreed to transfer to Buyer a
controlling interest in UNICO; and
WHEREAS, Seller represents that it shall hold a controlling interest in
UNICO;
WHEREAS, in order to comply with the terms of the aforementioned
Securities Subscription Agreement the parties desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and for other
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:
ARTICLE I
THE PURCHASE PRICE
1.1 Amount. Seller agrees to sell to Buyer and Buyer agrees to purchase
all of the securities held by Seller in UNICO which shall represent a
controlling interest in UNICO for the total sum of One ($1.00) Dollar.
1.2 Payment. Buyer shall deliver to Seller with the execution of this
Agreement the sum of One ($1.00) Dollar being the purchase price of shares to
transferred to the Escrow Agent. In the event Seller either cannot or does not
have all of the documents required at the Close hereunder for deliver to the
Buyer at the date of the close, then Buyer at its option may (i) terminate this
Agreement and thereupon Seller shall return the payment to Buyer, or (ii) extend
the Seller's time to deliver said documents thirty (30) days. If at the end of
the time Seller cannot or does not deliver said documents to Buyer, this
Agreement shall be deemed automatically terminated and thereupon, the payment
shall be returned by Seller to Buyer. "Close" shall mean the effective date of
the merger of Seller's subsidiary, United Marketing Merger Corp., with and into
United Marketing Solutions Inc., a subsidiary of Nexgen.
1.3 Additional Undertaking. In conjunction with the sale of shares of
Common Stock being sold herein and
72
<PAGE> 2
receiving payment as provided for herein, Seller shall deliver to Buyer a letter
from the existing directors of UNICO in which such directors agree to resign as
directors of UNICO upon consummation of the merger between United Marketing
Solutions, Inc., and Seller's special purpose subsidiary, United Marketing
Merger Corp.; and to appoint such new members of the board of directors of UNICO
as the Buyer designates.
ARTICLE II
SELLER'S REPRESENTATIONS
The Seller makes the following representations and warranties to the
best of its knowledge and based on representations made to Seller by UNICO:
(a) UNICO was incorporated in the State of Delaware on April 11,
1984. UNICO sold 805,000 shares of its Common Stock to the
public pursuant to an S-19 offering statement filed with the
Securities and Exchange Commission with full registration.
UNICO presently has outstanding 2,119,077 shares of Common
Stock and the requisite shares of Preferred Stock.
(b) At the closing, Seller shall deliver to Buyer all the true
copies of filings by UNICO with the S.E.C. together with
filing number for the past three (3) years which Seller shall
obtain possession of pursuant to the close between UNICO and
Next Generation Media Corp.
(c) UNICO's authorized capital is 20,000,000 shares of Common
Stock $.01 par value, together with preferred stock and
promissory notes as listed on the attached Schedule A. All
issued and outstanding shares of Common Stock are validly
issued, fully paid and non-assessable. The Seller shall
deliver to the Buyer UNICO's Certificate of Incorporation and
by-laws, which shall be the original sets where practical,
each as amended and in effect on the date of closing and a
Certificate of Good Standing and evidence of the payment of
all franchise taxes. As of the date of the closing, Nexgen
shall have no more than 3,700,000 common shares and 320,000
preferred shares issued and outstanding.
(d) There are no actions, suits, proceedings, governmental
investigations, judgments, orders, injunctions or decrees
pending, outstanding, or threatened against UNICO of any kind
or nature whatsoever. UNICO has duly filed all tax reports and
returns required to be filed by it and UNICO owes no federal,
state or local taxes of any kind or nature whatsoever. There
are no outstanding agreements or waivers extending the
73
<PAGE> 3
statutory period of limitations applicable to any federal or
state income tax return for any period. Additionally, Seller
hereby assumes and represents the Representations and
Warranties of Seller as set forth in paragraph 2 of the Asset
Purchase Agreement between UNICO and Next Generation Media
Corp., dated May 1, 1998 attached hereto.
(e) Certain of UNICO's securities have been registered under the
Securities Act of 1933 (except for those securities that are
restricted securities under said Securities Act), and there is
no action pending by the Blue Sky Commission of any State.
(f) UNICO as of the date of closing will not have any debts,
liabilities or obligations of any kind or nature whatsoever,
including guarantees of any debts, liabilities or obligations
of others, whether contingent or absolute, matured or
unmatured, or liquidated or unliquidated and the foregoing
shall be certified by a Certified Public Accountant,
guaranteed by the existing board of directors of UNICO, by way
of a pro forma balance sheet to be delivered at the close also
attached hereto.
(g) As of the date of closing, there are no warrants, stock
options, debentures, bonds or any other type of securities
authorized, reserved, issued or outstanding and, except as
stated in Article II herein, no further securities will be
authorized or issued before closing, and no preemptive or
contractual rights exist with respect to any shares of Common
Stock of UNICO.
(h) At the time of closing, the Seller will deliver to the Buyer a
stockholders' list dated as of the date of this close which
shows the name, address and number of shares owned of record
by each shareholder, the list to contain not less than 503
shareholders.
(i) The Seller shall deliver at closing, stock certificates for
said Four Hundred Twenty Eight Thousand One Hundred Eighty
Five (428,185) preferred shares of stock in UNICO, carrying a
four to one voting right as of May 4, 1998 and the additional
common stock held by the directors as set forth in the
attached Schedule A to be delivered not later than May 15,
1998 representing not less than Fifty Four and
ninety-eight/hundredths (54.98%) percent of the voting power
in UNICO (hereinafter "controlling interest") duly endorsed
for transfer to Buyer or accompanied by duly executed stock
powers in form sufficient to permit transfer of such shares to
Buyer (or Buyers assigns or nominees), with any necessary
stock transfer tax or other documentary tax stamps affixed
thereto, together with the
74
<PAGE> 4
certificates of preferred and common stock and evidence of the
cancellation of certain promissory notes issued by UNICO and
held by Seller as set out in the schedule.
(j) Within two (2) weeks of the execution of this Agreement, UNICO
shall deliver audited financial statements as of December 31,
1997, a pro forma balance sheet as of the date of close with
such financial statements to be given by the seller's auditor
and guaranteed by the existing board of directors of UNICO
showing no assets and no liabilities, and to accurately
present the financial condition of UNICO with its CPA's
opinion attached thereto.
(k) The Seller has disclosed to the Buyer all facts material to
the condition, assets, liabilities, businesses and operations
of UNICO.
(l) Neither the Seller nor UNICO, nor any agent acting on their
behalf, has taken or will take any action which would subject
the shares being purchased hereunder to the provisions of
Section 5 of the Securities Act of 1933, as amended, or to the
provisions of any securities or Blue Sky law of any State.
(m) The Seller consents to join with the Buyer, as of the closing
date, and issue a joint statement to the public through a
suitable investor relations consultant as to the nature of the
transaction and to prepare in conjunction with the Buyer the
necessary proxy statement to contain the Buyer's proposals for
UNICO. The costs and expenses for the preparation of such
statement shall be borne by the Seller.
ARTICLE III
THE CLOSING
Closing shall take place simultaneously with the closing of the Asset
Purchase Agreement between UNICO and Next Generation Media Corp., dated May 5,
1998, which shall be within the time periods for which provision is made in
Article I herein. At Closing, Buyer shall deliver by cash, certified or cashiers
check to Seller for the balance of the purchase price.
Pending closing, Seller and UNICO agree to afford the Buyer and his
authorized representatives full access to all of UNICO's book and records.
Upon delivery of the shares from the Escrow Agent, the Buyer agrees
that it shall not, with respect to such stock held by or on behalf of Buyer,
vote, or take part in or consent to, any corporate or shareholders' action of
the Corporation other than a vote in favor of the merger between United
Marketing Solutions, Inc., and United Marketing Merger Corp., (the "Merger")
until the
75
<PAGE> 5
Effective Date of the Merger. Buyer shall not receive any distribution as a
result of the Merger. Buyer further agrees that, until the Effective Date of the
Merger, Buyer will not sell, transfer or otherwise dispose of its shares in
UNICO, Inc.
ARTICLE IV
SELLER'S CLOSING CONFIRMATIONS
Buyer shall receive at closing a letter dated the closing date, from
Seller to the effect that, to the best of Seller's knowledge and based on
representations made to Seller by UNICO:
(a) UNICO is a corporation duly organized validly existing and in
good standing under the laws of the State of Delaware.
(b) No consent of or filing with any federal, state or local
authority is required in connection with the execution,
delivery and performance of this Agreement by the Seller.
(c) The authorized capital stock of UNICO consists of Twenty
Million (20,000,000) shares of Common Stock and shares of
Preferred Stock as set forth in the schedule.
(d) There are no lawsuits or proceedings before any court or
administrative agency pending or threatened against or
relating to UNICO and UNICO is not subject to any reasonably
possible or assertion and which could adversely affect or
impair properties of UNICO.
(e) The Seller shall undertake and employ all its efforts to
maintain UNICO's listing on NASD-OTC bulletin until the final
completion of the merger.
ARTICLE V
SUNDRY PROVISIONS
6.1 Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto however must be read
in conjunction with the executed Securities Subscription
Agreement dated May 4, 1998 and may not be amended except by
written agreement signed by all the parties hereto.
6.2 Binding Agreement. The Agreement shall be binding upon the
heirs, successors an assigns of the parties hereto.
6.3 No Assignment. No Assignment of any rights or obligations
hereunder may be made without the express written consent of
the other party hereto.
76
<PAGE> 6
6.4 Expenses. Each of the parties hereto shall assume and bear all
expenses, costs and fees incurred or assumed by it in
connection with the preparation and execution of this
Agreement whether or not the sale and purchase herein provided
for shall in fact be effectuated and each party hereto by its
execution and delivery of this Agreement, agrees to, and shall
indemnity and hold harmless the other party hereto from and
against any and all liabilities or claims or respect to any
such expenses, costs or fees.
6.5 Descriptive Headings. The descriptive headings of the several
Articles and sections of this Agreement are inserted for
convenience only and shall not control or affect in any way or
to any extent the meaning, construction or interpretation of
this Agreement or of any of the provisions hereof.
6.6 Counterparts. For the convenience of the parties, any number
of counterparts of this Agreement may be executed by any one
or more parties hereto and each such executed counterpart
shall be, and shall be deemed to be an original instrument,
and to have the force and effect of an original, but all of
which shall constitute, and shall be deemed to constitute, in
the aggregate, but one and the same instrument.
6.7 Survival of Closing. The provisions of all Articles hereof and
all warranties and representations herein survive the Closing
and shall not be merged in the instrument or instruments of
conveyance from Seller to Purchaser.
6.8 Time. Time is of the essence of this Agreement and of the
covenants and provisions hereof.
6.9 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York.
6.10 Covenant of Further Assurance. The Buyer and Seller,
respectively, covenant and agree, each with the other, that
each such party hereto shall from time to time execute and
deliver or cause to be executed and delivered all such further
instruments of conveyance, transfer, assignments, Bills of
Sale, receipts and other instruments, and shall take or cause
to be taken such further or other action as the Buyer or
Seller, as the case may be, may reasonably deem necessary in
order to transfer and assign to and to vest in and confirm to
the Buyer or to Seller, as the case may be, title to an
possession of all of the rights, privileges, powers and
franchises and property agreed to be and intended to be so
transferred, assigned, vested and confirmed in such
77
<PAGE> 7
party hereunder, respectively, and otherwise to carry out the
intent and purposes of this Agreement.
ARTICLE VI
TERMINATION OF AGREEMENT
If Buyer does not close within 10 days of receipt of documents
prescribed by the Agreement, Seller will consider this Agreement null and void
without recourse by Buyer. The payment, excluding the payment contained in the
securities subscription agreement, will be considered as liquidated expenses.
NOTE: THIS AGREEMENT SUPERSEDES ALL PREVIOUS CONTRACTS EITHER ORAL OR WRITTEN
BEFORE THIS DATE OF MAY 4, 1998, AND NEITHER PARTY WILL BE HELD LIABLE FOR ANY
UNDERSTANDING THEREOF.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first above written.
/s/ Joel Sens /s/ Gerard Bernier
- ----------------------- -----------------------
JOEL SENS UNICO
By:
/s/ Peter G. Fletcher
- -----------------------
T.C. EQUITIES LTD.
By:
78
<PAGE> 8
SCHEDULE A
UNDER CAPITALIZATION:
<TABLE>
<S> <C>
2,119,077 Shares of Common Stock issued and outstanding
418,185 Shares of Series C Preferred Stock issued and outstanding
- ---------
3,831,817 Equivalent total voting power of issued and outstanding stock
</TABLE>
All other capital stock and promissory notes to be cancelled
by the Closing.
SHARES TO BE TRANSFERRED BY NEXGEN TO T.C. EQUITIES LTD:
<TABLE>
<S> <C>
428,185 shares of Series C Preferred with equivalent common stock voting power of: 1,712,740
169,432 shares of common stock acquired from Bernier(5) 169,432
179,650 shares of common stock acquired from Bomstad(6) 179,650
45,000 shares of common stock acquired from Zadjel 45,000
TOTAL 2,106,822
2,106,822/3,831,817 = 54.98%
</TABLE>
- ----------
(5) Of Mr. Bernier's 215,682 common shares listed in UNICO, Inc.'s 10-K, 46,250
are options that will be cancelled.
(6) Of Mr. Bomstad's 205,900 common shares listed in UNICO, Inc.'s 10-K, 12,500
are options that will be cancelled, and 13,750 are shares that will be
cancelled.
79
<PAGE> 1
EXHIBIT 2.8
SECURITIES SUBSCRIPTION AGREEMENT
THIS SECURITIES SUBSCRIPTION AGREEMENT dated as of May 4,1998 (the
"Agreement"), is executed in reliance upon the exemption from registration
afforded by Rule 505 of Regulation D ("Regulation D") as promulgated by the
Securities and Exchange Commission ("SEC"), under the Securities Act of 1933, as
amended. Capitalized terms used herein and not defined shall have the meanings
given to them in Regulation D.
This Agreement has been executed by T.C. Equities, Ltd., (hereinafter
"Buyer"), a Bahamas corporation, in connection with the private placement of
70,000 shares of Redeemable Cumulative Convertible Preferred Stock in the
company Next Generation Media, Corp., also known as "Nexgen", a corporation
organized under the laws of Nevada, with its principal executive offices located
at 900 North Stafford Street, Suite 2003, Arlington, Virginia 22203 (hereinafter
referred to as "Seller"). Buyer hereby represents and warrants to, and agrees
with Seller:
SECURITIES SUBJECT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS AND
NEITHER THE SECURITIES NOR ANY COMPONENT THEREOF OR INTEREST THEREIN MAY
BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE OWNER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES
OR COMPONENT THEREOF OR INTEREST THEREIN, MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
1. Agreement To Subscribe: Purchase Price
(a) Subscription. The undersigned Buyer hereby subscribes for
and agree to purchase 70,000 shares of Redeemable Cumulative Convertible
Preferred Stock in the company called Next Generation Media, Corp., with a
redemption price of $5.00 per share (hereinafter the "Securities") and a face
value of $350,000.00. The Buyer may redeem at its option 35,000 shares of the
Securities after six (6) months from the date of this transaction, 17,500 shares
of the Securities after nine (9) months from the date of this transaction and
17,500 shares of the Securities after twelve (12) months from the date of this
transaction. Seller shall issue 250,000 warrants for common stock in Nexgen
(hereinafter the "underlying securities") at an exercise price of $0.16 per
warrant valid for period of five (5)
80
<PAGE> 2
years from the date of issue.
(b) Payment. The aggregate Purchase Price for the Shares by
the Buyer shall be Three Hundred Fifty Thousand United States Dollars (U.S.
$350,000.00) (the "Purchase Price"), which shall be payable simultaneously with
the delivery of this Agreement by delivering immediately available funds in
United States Dollars by wire transfer to the designated depository of Shane
Henty Sutton, P.C., as Escrow Agent ("Escrow Agent") for closing by delivery of
securities versus payment together with a fully executed Agreement for the
delivery of a controlling interest in UNICO, Inc., a Delaware Corporation.
(c) Closing. Subject to the satisfaction of the conditions set
forth in Sections 7 and 8 hereof, the consummation of the transactions
contemplated hereby will occur on or before May 4, 1998. Immediately following
the closing, Seller shall effectuate the filing of an S-4 registration statement
with the S.E.C. as soon as practicable within a period not to exceed four (4)
weeks of the date of this Agreement, Seller hereby grants to Buyer "piggy back"
registration rights for the underlying shares of the warrants when Seller has an
S-1 registration statement declared effective by the S.E.C.
2. Buyer Representations and Covenants: Access to Information.
In connection with the purchase and sale of the Securities, Buyer
represents and warrants to, and covenants and agrees with Seller as follows:
(i) Buyer is purchasing the Securities for its own account and
Buyer is qualified to purchase the Securities under the laws of its jurisdiction
of residence, is an accredited investor under the 1933 Act, and the offer and
sale of the Securities will not violate the securities or other laws of such
jurisdiction; Buyer is not, and on the closing date will not be, an affiliate of
Seller;
(ii) All offers and sales of any of the Securities by Buyer
shall be made in compliance with any applicable securities laws of any
applicable jurisdiction and in accordance with Rule 505 or pursuant to
registration of securities under the 1933 Act and subject to the requirements
described in the preamble of this Agreement;
(iii) The transactions contemplated by this Agreement are not
and will not be part of a plan or scheme by Buyer, to evade the registration
provisions of the 1933 Act;
(iv) Buyer understands that the Securities are not registered
under the 1933 Act and are being offered and sold to it in reliance on specific
exclusions from the registration requirements of Federal and State securities
laws, and that
81
<PAGE> 3
Seller is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgements and understandings of Buyer set forth
herein in order to determine the applicability of such exclusions and the
suitability of Buyer and any purchaser from Buyer to acquire the Securities;
(v) Buyer has not conducted or permitted and shall not conduct
or permit any general solicitation relating to the offer and sale of any of the
Securities;
(vi) Buyer has the full right, power and authority to enter
into this Agreement and to consummate the transaction contemplated herein. This
Agreement has been duly authorized, validly executed and delivered on behalf of
Buyer and is a valid and binding agreement in accordance with its terms, subject
to general principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally;
(vii) The execution and delivery of this Agreement and the
consummation of the purchase of the Securities, and the transactions
contemplated by this Agreement do not and will not conflict with or result in a
breach by Buyer of any of the terms of provisions of, or constitute a default
under, the articles of incorporation or by-laws (or similar constitutive
documents) of Buyer or any indenture, mortgage, deed of trust, or other material
agreement or instrument to which Buyer is a party or by which it or any of its
properties or assets are bound, or any existing applicable law, rule or
regulation of the United States or any State thereof or any applicable decree,
judgment or order of any Federal or State court, Federal or State regulatory
body, administrative agency or other United States governmental body having
jurisdiction over Buyer or any of its properties or assets;
(viii) All invitation, offers and sales of or in respect of,
any of the Securities, by Buyer and any distribution of Buyer of any documents
relating to any offer by it of any of the Securities will be in compliance with
applicable laws and regulations;
(ix) Buyer will not make any offer or sale of the Securities
by any means which would not comply with the laws and regulations of the
territory in which such offer or sale takes place;
(x) Buyer has been advised to consult its own legal and tax
advisors with respect to applicable resale restrictions and applicable tax
considerations and it is solely responsible (and Seller is not in any way
responsible) for compliance with applicable resale restrictions and applicable
tax legislation;
(xi) No Government Recommendation or Approval. Buyer
82
<PAGE> 4
understands that no Federal or State or foreign government agency has passed on
or made any recommendation or endorsement of the Securities;
(xii) Current Public Information. Buyer acknowledges that the
Company is a "Reporting Issuer" and is current with filings, and Buyer and its
advisors, if any, have been furnished with the opportunity to ask questions
about, and request copies of materials relating to, the business, finances and
operations of Seller. Buyer further acknowledges that it and its advisors, if
any, have received complete and satisfactory answers to such inquiries, to the
extent made; on the basis of the foregoing, the Buyer believes that an
investment pursuant to the terms hereof is an appropriate and suitable
investment for the Buyer,
(xiii) Buyer's Sophistication. Buyer acknowledges that the
purchase of the Securities involves a high degree of risk, including the total
loss of Buyer's investment. Buyer has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
purchasing the Securities. Buyer understands that, at the time of issuance, the
Securities are not being registered under the 1933 Act, and therefore Buyer must
bear the economic risk of this investment for the period up to any registration.
(xiv) Tax Status. Buyer is not a "10-percent Shareholder"(as
defined in Section 871(h)(3)(B) of the U.S. Internal Revenue Code of 1986, as
amended) of Seller.
(xv) High Degree of Risk. The Buyer realizes that this
investment involves a high degree of risk, including the total loss of the
investment.
(xvi) Ability to Bear the Risk. The Buyer is able to bear the
economic risk of the investment.
(xvii) Forward Looking Information. The Buyer acknowledges and
understands that any information provided about the Company's future plans and
prospects is uncertain and subject to all of the uncertainties inherent in
future predictions.
(xviii) Accredited Investor Status. The undersigned represents
and warrants that it is an "accredited investor" as defined in Regulation D.
(xix) Independent Investigation. The Buyer in electing to
subscribe for the Securities hereunder, has relied solely upon the
representations and warranties of the Company set forth in this Agreement and on
independent investigation made by it and its representatives, if any, and the
Buyer has been given no oral or written representation or assurance from the
Company or any representation of the Company other than as set forth in this
Agreement or in a document executed by a duly authorized
83
<PAGE> 5
representative of the Company making reference to this Agreement.
3. Seller Representations and Covenants.
(a) Reporting Company Status. Seller is a "Reporting Issuer"
and is current in its filings with the Securities and Exchange Commission.
Seller's Common Stock (the "Common Stock"), is not yet listed on any exchange
however after the filing of an S-1 registration statement Seller shall
immediately list the shares to have the stock listed on NASDAQ or other
equivalent national stock exchange.
(b) Current Publication Information. To the extent requested
by the Buyer, Seller has furnished Buyer with copies of materials relating to
the business finances and operations of the Seller's business.
(c) Concerning the Securities. The issuance, sale and delivery
of the Securities have been duly authorized by all required corporate action on
the part of Seller, and when issued, sold and delivered in accordance with the
terms hereof and thereof for the consideration expressed herein and therein,
will be duly and validly issued, fully paid and non-assessable. The Common Stock
issuable upon the close of this Agreement has been duly and validly reserved for
issuance and, upon issuance shall be duly and validly issued, fully paid, and
non-assessable and will not subject the holders thereof, if such persons are
non-U.S. persons, to personal liability by reason of being such holders. There
are no pre-emptive rights of any shareholder of Seller.
(d) Subscription Agreement. This Agreement has been duly
authorized, validly executed and delivered on behalf of Seller and is a valid
and binding agreement in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the enforcement
of creditors' rights generally.
(e) Non-contravention. The execution and delivery of this
Agreement and the consummation of the issuance of the Securities and the
transactions contemplated by this Agreement do not and will not conflict with or
result in a breach by Seller of any of the terms or provisions of, or constitute
a default under, the articles of incorporation or by-laws of Seller, or any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which Seller is a party or by which it or any of its properties or assets are
bound, or any existing applicable law, rule or regulation of the United States
or any State thereof or any applicable decree, judgment or order of any Federal
or State court, Federal or State regulatory body, administrative agency or other
United States governmental body having jurisdiction over Seller or any of its
properties or assets.
(f) Approvals. Seller is not aware of any
84
<PAGE> 6
authorization, approval or consent of any U.S. governmental body which is
legally required for the issuance and sale of the Securities as contemplated by
this Agreement.
(g) Filings. Seller undertakes and agrees pursuant to the sale
of its securities under Regulation D to make all necessary filings in connection
with the sale of its securities as required by the laws and regulations of the
United States.
(h) No Prior Offerings. Seller has not undertaken any
offerings in the last six (6) months which should be integrated into the
transaction.
(i) Non-Dilution. Seller agrees that, after the close of the
merger, it shall not dilute the net share value or interest of the Buyer in the
Company either by issuing additional common shares or by the means of reverse
stock split. In the event that, after the close of the merger, additional shares
of the Company are issued to any of the principals, the Buyer shall receive an
equal number of shares, pari passu, to retain its equity position in the
Company. However, after the close of the merger, in the event that Seller needs
to issue additional shares within twelve months from the date of this agreement,
as part of an offer to raise capital in the first six months, Buyer will consent
to such dilution and in consideration Seller will accelerate Buyers option to
redeem 35,000 shares as set out in Clause 1 (a) and repay to Buyer the amount of
$175,000.00 at the close of Seller's funding transaction and provided, that
Seller shall remain obligated to redeem the remaining issued and outstanding
Redeemable Cumulative Convertible Preferred Stock as otherwise required. In the
event that such consent is required in the second six month period, Seller shall
accelerate the remaining obligations to Buyer, which shall then be fully
discharged. In all other respects, the terms of Clause 1 (a) shall remain
unchanged. Nexgen shall have, as of the date of closing, no more than,
3,700,000 shares of issued and outstanding common stock and 320,000 shares of
issued and outstanding preferred stock. There shall be no more than 450,000
options to purchase common stock of Nexgen at $.50 per share and the Seller
represents that no additional options shall be granted to any party after the
date hereof.
(j) Obligation to Provide Information. Seller agrees that it
shall keep Buyer informed as to the progress of any registration statement and
filings with the SEC and provide copies of all such filings to Buyer.
4. Exemption; Reliance on Representations. Buyer understands that the
offer and sale of the Securities are not being registered under the 1933 Act at
the time of issue.
5. Instructions.
(a) Subject to Section 11 hereof it shall be the
85
<PAGE> 7
Seller's responsibility to take all necessary actions and to bear all such costs
to issue the Securities and deliver them to the Escrow Agent prior to the
closing of this transaction as provided herein, including the responsibility and
cost for delivery of any necessary opinion letter to the transfer agent, if so
required, provided Buyer provides such certificates and information as may be
reasonably required to support that opinion. The Buyer, in whose name the
certificate of Securities is to be registered, shall be treated as a shareholder
of record on and after the issuance of the Securities.
(b) The issuance of certificates representing the Securities
hereunder does not in any manner imply that such shares are free from the resale
restrictions more fully described in Section 11 hereof.
6. Registration. Seller acknowledges that Buyer is an offshore trust
company and acknowledges that it shall make no inquiry as to the accredited
status of Buyer and in the event that the Company fails to issue certificates
for the Securities as provided hereunder to the Buyer for any reason other than
the Company's reasonable good faith belief that the representations and
warranties made by the Buyer in this Agreement are invalid or incorrect then the
Seller shall be required, at the request of the Buyer and at the Seller's
expense, to effect the registration of the Underlying Securities as promptly as
is practical. The Seller and the Buyer shall cooperate in good faith in
connection with the furnishing of information required for such registration and
the taking of such other actions as may be legally or commercially necessary in
order to effect such registration. The Seller shall file such a registration
statement within four (4) weeks of Buyer's demand and shall use its diligent
efforts to cause such registration statement to become effective as soon as
practicable thereafter. Such diligent efforts shall include, but not be limited
to, promptly responding to all comments received from the staff of the S.E.C.,
providing Buyer's counsel with a contemporaneous copy of all written
communications from and to the staff of the S.E.C. with respect to such
registration statement and promptly preparing and filing amendments to such
registration statement which are responsive to the comments received from the
staff of the Securities and Exchange Commission. Once declared effective by the
S.E.C., the Seller shall cause such registration statement to remain effective
until the sale by the Buyer of all Underlying Securities registered. The Seller
shall include on the applicable registration form the Buyer as a selling
shareholder in connection with the Underlying Securities and upon the
effectiveness of such registration statement. Buyer shall have the option to
sell the underlying Securities.
7. Authorized and Issued Shares. The Seller shall at all times reserve
and have available all Securities necessary to comply with the terms of this
Agreement.
86
<PAGE> 8
8. Delivery Instructions. The Securities being purchased hereunder
shall be delivered to the Escrow Agent at such time and place as shall be
mutually agreed by Seller and Buyer.
9. Conditions to Seller's Obligation To Sell. Seller's obligation to
sell the Securities is conditioned upon:
(a) The receipt and acceptance by Seller of this Agreement
executed by Buyer.
(b) Delivery to the Escrow Agent of good funds by Buyer as
payment in full of the purchase price of the Securities.
(c) All of the representations and warranties of the Buyer
contained in this Agreement shall be true and correct on the Payment Date with
the same force and effect as if made on and as of the Payment Date. The Buyer
shall have performed or complied with all agreements and satisfied all
conditions on its part to be performed, complied with or satisfied at or prior
to the Payment Date.
(d) No order asserting that the transactions contemplated by
this Agreement are subject to the registration requirements of the Act shall
have been issued, and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Company, be contemplated. No
stop order suspending the sale of the Securities shall have been issued, and no
proceedings for that purpose shall have been commenced or shall be pending or,
to the knowledge of the Company, contemplated.
(e) No action shall have been taken and no statue, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency that would prevent the issuance of the Securities. No
injunction, restraining order or order of any nature by a federal or state court
of competent jurisdiction shall have been issued that would prevent the issuance
of the Securities.
10. Conditions To Buyer's Obligation To Purchase. Buyer's obligation to
purchase the Securities is conditioned upon:
(a) The confirmation of receipt and acceptance by Seller of
this Agreement as evidenced by execution of this Agreement by the duly
authorized officer of Seller;
(b) delivery of the Securities to the Escrow Agent; and
(c) the transfer to the Escrow Agent of a fully executed
Agreement for the delivery of controlling interest in UNICO, Inc., a Delaware
Corporation, to the Buyer.
87
<PAGE> 9
11. Offering Materials and Resale Restrictions. Except for this
Subscription Agreement, no offering materials and documents have been issued in
connection with the offer and sale of the Securities. The Securities and
Underlying Securities have not been registered under the 1933 Act or applicable
state securities laws; neither Buyer, nor any direct or indirect purchaser of
the Securities from Buyer, may directly or indirectly offer or sell the
Securities or Underlying Securities unless the Securities or Underlying
Securities are registered under 1933 Act, any applicable state securities laws,
or any exemption from the registration requirements of the 1933 Act. Such
statements shall appear (1) on the cover of any prospectus or offering circular
used in connection with the offer or sale of the Securities, (2) in the
underwriting section of any prospectus or offering circular used in connection
with the offer or sale of the Securities, and (3) in any advertisement made or
issued by Seller, Buyer, any other distributor, any of their respective
affiliates, or any person acting on behalf of any of the foregoing. In order to
prevent resale transactions in violation of state securities laws, the Buyer may
only engage in resale transactions, to the extent otherwise permitted, in
jurisdictions in which an applicable exemption is available.
12. Miscellaneous.
(a) Except as specifically referenced herein, this Agreement
constitutes the entire contract between the parties in conjunction with the
Stock Purchase Agreement, and neither party shall be liable or bound to the
other in any manner by any warranties, representations or covenants except as
specifically set forth therein. Any previous agreement among the parties related
to the transactions described herein is superseded hereby. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein. Neither party may assign its rights or
obligations under this Agreement without the written consent of the other party.
(b) Buyer is an independent contractor, and is not the agent
of Seller. Buyer is not authorized to bind Seller, or to make any
representations or warranties on behalf of Seller.
(c) Seller represents that Buyer will receive all the benefits
of the representations in the annexed Nexgen Merger Agreement in relation to the
Seller, its finances, assets, business prospects or otherwise. Buyer will advise
each purchaser, if any, and potential purchaser of the Securities, of the
foregoing sentence, and that such purchaser is relying on its
88
<PAGE> 10
own investigation with respect to all such matters, and that such purchaser will
be given access to any and all documents and Seller personnel as it may
reasonably request for such investigation.
(d) All representations and warranties contained in this
Agreement by Seller and Buyer shall survive the closing of the transactions
contemplated by this Agreement.
(e) This Agreement shall be construed in accordance with the
laws of New York applicable to contracts made and wholly to be performed within
the State of New York and shall be binding upon the successors and assigns of
each party hereto, Buyer and Seller hereby waive trial by jury and consent to
exclusive jurisdiction and venue in the State of New York. This Agreement may be
executed in counterparts, and the facsimile transmission of an executed
counterpart to this Agreement shall be effective as an original.
13. Escrow Agent. Seller and Buyer hereby appoint the Escrow Agent to
receive the proceeds of all sales of the Securities(the "Funds") and the
Securities (hereinafter referred to together as the "Escrowed Property"), and to
hold and disburse the Escrowed Property in accordance with the terms of this
Agreement and Escrow Agent accepts such appointment on the following terms and
conditions:
(a) It is specifically understood and agreed that the only
obligation of Escrow Agent hereunder is to disburse the Escrowed Property
pursuant to the terms hereof, and Escrow Agent shall have no obligation to
Seller, Buyer or any other party whatsoever, including but not limited to any
party claiming by or through Seller or Buyer upon such disbursement.
(b) Escrow Agent shall not be under any duty to give the
Escrowed Property any greater degree of care than it gives its own similar
property, and it shall have no liability hereunder, whether for negligence or
otherwise, except for the intentional breach of its duties hereunder. Escrow
Agent shall have no duties or responsibilities except those as expressly set
forth herein, and no implied duties or obligations may be read into this
Agreement against the Escrow Agent.
(c) Escrow Agent may consult with counsel and shall be fully
protected, indemnified and held harmless with respect to any action taken or
omitted by Escrow Agent in good faith on advice of counsel.
(d) Escrow Agent makes no representation as to the validity,
value, genuineness or collectability of the Funds or of the Securities or any
other document or instrument held by or delivered to Escrow Agent.
89
<PAGE> 11
(e) Seller and Buyer hereby unconditionally agree to indemnify
the Escrow Agent and hold it harmless from and against any and all taxes (except
those taxes duly payable by Escrow Agent as a result of the compensation derived
by Escrow Agent hereunder, but including any other federal, state and local
taxes of any kind and other governmental charges), expenses, damages, actions,
suits or other charges incurred by or brought or assessed against Escrow Agent:
(i) for anything done or omitted by Escrow Agent in
the performance of its duties hereunder; or
(ii) on account of its acting in its capacity as
Escrow Agent or stakeholder hereunder, except as a result of its intentional
breach of its duties under this Agreement.
(f) The agreements contained herein shall survive any
termination of this Agreement and the duties of the Escrow Agent hereunder.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first set forth above.
Official Signatory of Seller:
-----------------------------
NEXT GENERATION MEDIA CORP.
By: /s/ Lawrence Grimes
--------------------------
Accepted this 4th day of May, 1998 Title: President
-----------------------
Official Signatory of Buyer:
----------------------------
T.C. EQUITIES:
/s/ Peter G. Fletcher
----------------------------
90
<PAGE> 1
EXHIBIT 4.1
UNANIMOUS WRITTEN CONSENT OF THE
BOARD OF DIRECTORS
OF NEXT GENERATION MEDIA CORP.
The undersigned, being all the members of the Board of
Directors (the "Board of Directors") of NEXT GENERATION MEDIA CORP., a Nevada
corporation (the "Corporation"), pursuant to Sections 78.315, 78.390 and 78.403
of the General Corporation Law of the State of Nevada (the "NGCL"), do hereby
take the following actions as of April 17, 1998, by unanimous written consent in
lieu of a special meeting and do hereby consent that the resolutions set forth
below shall be deemed to have been adopted to the same extent and to have the
same force and effect as if adopted at a formal meeting of the Board of
Directors of the Corporation, duly called and held for the purpose of acting
upon proposals to adopt such resolutions. Each of the undersigned does hereby
waive all formal requirements, including the necessity of holding a formal
meeting and any requirements that notice of such meeting be given.
The following resolutions are hereby adopted:
WHEREAS, the undersigned constitute all of the members of the Board of
Directors of the Company, and the Bylaws of the Company and the
corporation laws of the State of Nevada permit actions without a
meeting of the directors if all of the members of the Board of
Directors consent to such actions in writing;
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Corporation to purchase all of the outstanding shares
of capital stock of United Marketing Solutions Inc., a Virginia
corporation ("UMSI"), and as the sole shareholder of United Merger
Company Inc. ("Newco"), for the Corporation and Newco to engage in
certain transactions in connection with the merger of Newco into UMSI
(the "Merger") with the result that UMSI will become a wholly owned
subsidiary of the Corporation and, in connection with and to facilitate
the Merger, the Board of Directors has determined that it is in the
best interests of the Corporation to engage in certain other
transactions including a purchase of the Series C Preferred Shares and
subordinated debt of UNICO, Inc., a Delaware corporation ("Unico") and
the sale of certain shares of the Corporation for cash and securities
to Gerard R. Bernier, Gerald Bomstad, Jr., Leon Zajdel and T.C. Capital
Ltd., a Bahamian corporation (collectively, with the Merger, the
"Transactions"); and
WHEREAS, there have been presented to the Board of Directors drafts of
various documents related to the Transactions (the "Transaction
Documents"), including, among others:
91
<PAGE> 2
1. Letter agreement among Renaissance Capital Partners,
Ltd., the Duncan Smith Company and the Corporation
for the purchase by the Corporation of Series C
Preferred Shares and subordinated debt of Unico dated
March 18, 1998 (attached hereto as Exhibit A);
2. a draft of the Stock Purchase Agreement and Agreement
of Merger among Unico, UMSI, Newco and the
Corporation for the purchase by the Corporation of
the common stock of UMSI held by Unico (attached
hereto as Exhibit B); and
3. a draft of the Stock Purchase Agreement between T.C.
Capital Ltd., a Bahamian corporation ("T.C. Capital")
for the sale of shares of certain newly issued
securities of the Corporation (attached hereto as
Exhibit C); and
WHEREAS, for purposes of carrying out these Resolutions, the Board of
Directors has approved and recommended to the shareholders of the
Corporation an amendment to the Articles of Incorporation of the
Corporation to provide for the creation of two series of a new class of
shares in the Corporation; and
WHEREAS, in connection with the Transactions and Transaction Documents,
it is deemed to be in the best interests of the Corporation (a) to
reserve shares of the common stock (par value $0.01 per share) of the
Corporation for the issuance upon the consummation of the Transactions
to holders of common stock of Unico, upon the merger of Newco into UMSI
and (b) to authorize and issue two series of a new class of stock of
the Corporation as contemplated by the Transaction Documents;
TRANSACTION RESOLUTIONS
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors finds that
it is advisable and in the best interests of the Corporation to enter
into the Transactions; and
BE IT FURTHER RESOLVED, each of the Transaction Documents is hereby
approved in the form presented, together with all such changes,
additions and deletions as to any or all of the terms thereof as any
officer executing any such agreements or instruments may deem necessary
or desirable, such execution by such officer to be conclusive evidence
that he deems all of the terms and provisions thereof to be necessary
and advisable; and
BE IT FURTHER RESOLVED, that each officer, or any of them,
92
<PAGE> 3
is authorized to execute, in the name and on behalf of the Corporation
(and, if required, under the Corporation's corporate seal), as the case
may be, and deliver any other agreements, certificates, instruments or
documents such officer deems necessary, advisable or proper in
connection with or pursuant to the Transaction Documents; and
BE IT FURTHER RESOLVED, that each officer, or any of them, is
authorized to attest the signature of any officer executing on behalf
of the Corporation any Transaction Documents and any other agreement,
certificate or instrument related thereto, and is further authorized to
affix the corporate seal thereto; and
BE IT FURTHER RESOLVED, that each and every officer of the Corporation,
or any of them, is authorized to take any action necessary to pay any
expenses incurred by the Corporation in connection with the execution
and delivery of or performance under any of the Transaction Documents
or any other agreement, instrument or document executed in connection
therewith or pursuant thereto; and
BE IT FURTHER RESOLVED, that each and every officer of the Corporation,
or any of them, is authorized to take such action from time to time on
behalf of the Corporation as he or she may deem necessary, advisable or
proper in order to carry out and perform the obligations of the
Corporation under the Transaction Documents executed by the Corporation
pursuant to these resolutions and under any other agreements, documents
or instruments executed and delivered on behalf of the Corporation
pursuant thereto and in connection therewith, and is further authorized
to take such action from time to time on behalf of the Corporation as
he or she may deem necessary, advisable or proper in order to
facilitate the Transactions contemplated thereby; and
BE IT FURTHER RESOLVED, that each officer, or any of them, be and
hereby is authorized to certify to any parties to Transaction Documents
or other agreements, documents or instruments executed pursuant to
these resolutions a copy of these resolutions and the names and
signatures of the Corporation's officers and employees hereby
authorized to act in the premises, and such parties are hereby
authorized to rely upon such certificate until formally advised by a
like certificate of any change therein, and are hereby authorized to
rely on any such additional certificates; and
BE IT FURTHER RESOLVED, that all the actions of the officers and
directors of the Corporation to date in connection with the Transaction
Documents be, and they hereby are, ratified, approved and confirmed.
93
<PAGE> 4
RESERVATION OF CAPITAL STOCK
NOW, THEREFORE, BE IT RESOLVED, that the Corporation shall reserve
220,000 shares of its common stock (par value $0.01) for issuance to
the Unico shareholders upon consummation of the Merger as provided for
in the Transaction Documents;
BE IT FURTHER RESOLVED, that the President and Secretary of the
Corporation are authorized and empowered to issue and sell shares of
common stock (par value $0.01) of this Corporation to such persons in
the amounts and for the consideration set forth in the Transaction
Documents;
BE IT FURTHER RESOLVED, that the shares of common stock issued and sold
by the Corporation pursuant to the foregoing resolution shall be
evidenced by certificates that shall have placed prominently thereon
all legends required by federal law, Nevada law, the Certificate of
Incorporation and/or the Bylaws;
BE IT FURTHER RESOLVED, that each share of common stock issued and sold
by the Corporation pursuant to the foregoing resolution, when the full
purchase price therefor shall have been received by the Corporation,
shall be a duly and validly issued, fully paid and nonassessable share,
and the consideration received therefor shall be credited to the
appropriate capital accounts of the Corporation; and
BE IT FURTHER RESOLVED, that the President and Secretary of the
Corporation are authorized, directed and empowered on behalf of the
Corporation and in its name to execute any applications, certificates,
agreements, or any other instruments or documents or amendments or
supplements thereto, or to do and to cause to be done any and all other
acts and things as such officers may in their discretion deem necessary
or appropriate to carry out the purposes of the foregoing resolution.
RECOMMENDATION TO THE SHAREHOLDERS
FOR AUTHORIZATION OF NEW CLASS OF STOCK
BE IT FURTHER RESOLVED, that the Board of Directors recommends to the
shareholders of the Corporation to amend Article IV of the Certificate
of Restated Articles of Incorporation as follows:
"The corporation is authorized to issue
50,000,000 shares of $0.01 par value common stock ("Common
Stock") and 1,000,000 shares of $0.001 par value preferred
stock ("Preferred Stock"). The Preferred Stock shall have such
designations, series, amounts, powers, preferences and
relative,
94
<PAGE> 5
participating, optional and other special rights and
qualifications, limitations and restrictions as shall be fixed
by the Board of Directors in its discretion."
BE IT FURTHER RESOLVED, that the Preferred Stock shall be divided into
two series, and the designations, amounts, powers, preferences and
relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof are hereby fixed
as follows:
Callable Cumulative Convertible Preferred Stock
1. DESIGNATION: The series of Preferred stock, the issuance of which is
hereby authorized, shall comprise 500,000 shares the distinctive serial
designation of which shall be "Preferred Stock, Series A", which is sometimes
referred to herein as "Callable Cumulative Convertible Preferred Stock." Each
share of Series A Preferred Stock shall be identical in all respects with all
other shares of Series A Preferred Stock. The number of shares of Series A
Preferred Stock that are purchased or otherwise acquired by the Corporation or
converted into Common Stock shall be canceled and shall revert to authorized but
unissued shares of Preferred Stock undesignated as to series.
2. DIVIDENDS: Each holder of record of a share or shares of Series A
Preferred Stock (a "Holder") of Series A Preferred Stock shall be entitled to
receive, prior to the payment of any dividends on the Common Stock, a cumulative
dividend of $0.30 per share per annum for the first six months and $0.50 per
share per annum thereafter. Dividends will accrue and not be payable until
eighteen months following the date of issue. Dividends will be payable provided
that the indebtedness of the Corporation to BancFirst, an Oklahoma banking
corporation ("BancFirst") is current, in accordance with the terms of the
Corporation's financing agreement with BancFirst. Dividends shall be payable
beginning eighteen months after the date of issue and on each anniversary
thereafter (each such date, a "Dividend Payment Date") by the Corporation.
Dividends payable in cash shall be paid by check to the addresses for the
respective Holders on the stock ledger of the Corporation or as designated by
the respective Holders in written notices given to the Corporation at least two
business days prior to the payment date or by such other means as may be agreed
to by the Corporation and the respective Holders. The Corporation will cause
written notice of each Dividend on the Series A Preferred Stock to be given to
each Holder within five business days after it is determined by the Board of
Directors.
3. VOTING RIGHTS: Except as otherwise required by law and as provided
herein, the Holders of the Series A Preferred Stock
95
<PAGE> 6
shall be entitled to vote on equal terms with the holders of the Common Stock as
a single class of the Corporation, that is one vote per share of Series A
Preferred Stock. Notwithstanding the foregoing, the Holders of the Series A
Preferred Stock, as a class, shall alone be entitled to vote for the election of
one director of the Corporation's Board of Directors for the first nine months
from the date of issue and shall be entitled to vote for the election of two
directors of the Corporation's Board of Directors following nine months from the
date of issue.
In the event that the Corporation proposes to engage in a sale of
substantially all of its assets, merge with or into another corporation, change
its primary lines of business (those businesses being the direct mail marketing
business and community newspaper business), incur more than $5,000,000 in
indebtedness or acquire property valued in excess of $5,000,000 and not in the
ordinary course of business, such transaction must be approved in advance by at
least a majority of the Series A Preferred Stock issued and outstanding at the
time of such vote in addition to any other requirements for the Corporation to
take such action.
4. LIQUIDATION PREFERENCE: In the event of any voluntary of involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
Holders of the Series A Preferred Stock then outstanding shall be entitled, for
each share of Series A Preferred Stock, to be paid out of assets of the
Corporation available for distribution to its stockholders $5.00 (such amount
payable being adjusted appropriately to reflect any stock split, stock
dividend,, reverse stock split, or any transaction with comparable effect on the
capital stock of the Corporation) (the "Liquidation Preference"). This
entitlement of the Holders of the Series A Preferred Stock, to the extent equal
to $5.00 for each share of Series A Preferred Stock, shall be satisfied before
any similar payment shall be made or any assets distributed to the holders of
the Common Stock or any other security junior in rank to the Series A Preferred
Stock as to distribution of assets upon such dissolution, liquidation or winding
up and otherwise shall be satisfied on a pari passu basis with the holders of
the Common Stock. If the assets of the Corporation are not sufficient to pay in
full the liquidation payments payable to all of the Holders of the outstanding
share of Series A Preferred Stock, the Holders of all such shares shall share
ratably in such distribution of assets in accordance to the liquidation
preference to which they are entitled. For the purposes of this section, neither
the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation nor the consolidation or merger of the Corporation
with one or more other corporations shall be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, unless such voluntary sale,
conveyance, exchange or transfer shall be in connection with a dissolution or
winding up of the business of the Corporation.
96
<PAGE> 7
5. RESTRICTIONS ON TRANSFER: The shares of Series A Preferred Stock are
unregistered securities. Therefore, the following restrictions apply to their
transfer:
THE SHARES OF SERIES A PREFERRED STOCK HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") NOR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATES, AND HAVE BEEN ISSUED IN RELIANCE
UPON EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION, OR
OTHER DISPOSITION OF ANY SUCH SECURITIES OR ANY INTEREST THEREIN MAY
NOT BE ACCOMPLISHED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS, OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY IN
FORM AND SUBSTANCE TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION
AND QUALIFICATION ARE NOT REQUIRED.
6. CONVERSION: The shares of Series A Preferred Stock are convertible
into shares of the Common Stock of the Corporation according to the following
provisions:
a. The conversion price for shares of the Series A Preferred
Stock will be affected by whether or not the Corporation has
filed a preliminary Form S-1 (or other applicable registration
statement form for an initial public offering) with the
Securities and Exchange Commission for an offering of the
Corporation's Common Stock (an "IPO") prior to the expiration
of six months after the acquisition by the Corporation of 100%
of the capital stock of United Marketing Solutions, Inc.
("UMSI") which will result in UMSI becoming a wholly owned
subsidiary of the Corporation (the "Merger").
b. IPO Before Six Months: The Series A Preferred Stock will
be convertible into Common Stock, at the Holder's option,
beginning six months after the closing of the Merger at a
conversion price which is the lesser of (a) $5.00 and (b) 110%
of the price for Common Stock issued in a private placement or
IPO (a "Corporation Stock Sale"). For example, if the a
Corporation Stock Sale occurs at $6.00 per share, the
conversion price used will be $5.00 and the 250,000 shares of
Series A Preferred Stock would be convertible into 250,000
shares of Common Stock. If a Corporation Stock Sale occurs at
$4.50 per share, the conversion price would be $4.95 (110%),
and the 250,000 shares of Series A Preferred Stock would be
convertible into approximately 252,525 shares of Common Stock.
c. No IPO Before Six Months: The Series A Preferred Stock will
be convertible into Common Stock at a conversion price which
is the lesser of (a) $4.50 and (b) 110% of the price for the
stock in a Corporation
97
<PAGE> 8
Stock Sale. For example, if a Corporation Stock Sale occurs at
$5.00 per share of Common Stock, the conversion price used
will be $4.50 and the 250,000 shares of Series A Preferred
Stock would be convertible into approximately 277,778 shares
of Common Stock. If a Corporation Stock Sale occurs at $3.00
per share, the conversion price would be $3.30 (110%), and the
250,000 shares of Series A Preferred Stock would be
convertible into approximately 378,789 shares of Common Stock.
d. The conversion price for shares of Series A Preferred Stock
is subject to adjustment in the event of a stock split, stock
combination or similar adjustment in the number of shares of
Common Stock outstanding. All shares of Common Stock issued
upon conversion of any shares of Series A Preferred Stock
shall be fully paid and nonassessable.
e. Any Holder of Series A Preferred Stock desiring to convert
any or all such shares into Common Stock shall so indicate in
writing to the Corporation. The Corporation shall, within
three business days after receipt of such written exercise,
cause to be issued and delivered, to such Holder a
certificate(s) representing the number of full shares (rounded
to the nearest whole number) of Common Stock to which such
Holder shall be entitled pursuant to the then-applicable
conversion price. Such conversion shall be deemed to have been
made on the date of receipt of such written notice from such
Holder, and such Holder shall be treated for all purposes as
the record holder of such Common Stock on such date and
thereafter.
7. SECURITIES CERTIFICATES: Shares of the Series A Preferred Stock
shall be certificated securities, and the transfer agent shall maintain the
stock ledger containing the names of the Holders and the amounts of such
Holders' shares of Series A Preferred Stock. Upon written request to the
Corporation, the Corporation shall forward to any Holder a copy of the page of
the Corporation's stock ledger indicating such Holder's amount of Series A
Preferred Stock recorded therein. The Corporation shall transmit to each Holder
of Series A Preferred Stock upon issuance of such stock certificate a statement
containing the terms herein. Each certificate shall bear a legend in the form of
the legend in paragraph 5 herein. No transfer of Series A Preferred Stock shall
be recorded in the stock ledger of the Corporation in violation of the
restrictions stated on such stock certificate.
8. REDEMPTION/CORPORATION'S RIGHT TO CALL: The Series A Preferred Stock
will be redeemable, in whole or in part, at the sole option of the Corporation
at any time. Upon a call in writing by the Corporation mailed to the Holders
(the date of such mailing, the "Call Date"), Holders of Series A Preferred
98
<PAGE> 9
Stock will have twenty (20) days to elect to convert their Series A Preferred
Stock into Common Stock. Following twenty-three (23) days after the Call Date,
the Corporation may redeem such Series A Preferred Stock and forward to the
Holder the redemption price, calculated as follows. If the Series A Preferred
Stock is called within the first six months after the Merger, such shares will
have a redemption price of $5.00 per share plus all accrued but unpaid dividends
up through the date ten days following the Call Date. If the Series A Preferred
Stock is called more than six months after the Merger, the redemption price will
be $6.00 per share plus all accrued but unpaid dividends up through the date ten
days following the Call Date.
9. REDEMPTION/HOLDER'S RIGHT TO PUT: The Series A Preferred Stock will
be redeemable, at the sole option of the Holder, five years from their date of
issuance at a price of $6.00 per share plus all accrued but unpaid dividends
upon written notice by the Holder to the Corporation.
Redeemable Cumulative Convertible Preferred Stock
1. DESIGNATION: The series of Preferred stock, the issuance of which is
hereby authorized, shall comprise 500,000 shares the distinctive serial
designation of which shall be "Preferred Stock, Series B", which is sometimes
referred to herein as "Redeemable Cumulative Convertible Preferred Stock." Each
share of Series B Preferred Stock shall be identical in all respects with all
other shares of Series B Preferred Stock. The number of shares of Series B
Preferred Stock that are purchased or otherwise acquired by the Corporation or
converted into Common Stock shall be canceled and shall revert to authorized but
unissued shares of Preferred Stock undesignated as to series.
2. DIVIDENDS: Each holder of record of a share or shares of Series B
Preferred Stock (a "Holder") of Series B Preferred Stock shall be entitled to
receive, prior to the payment of any dividends on the Common Stock, a cumulative
dividend of $0.50 per share per annum. Dividends will accrue and shall only be
payable upon redemption of the Series B Preferred Stock. Dividends will be
payable provided that the indebtedness of the Corporation to BancFirst is
current, in accordance with the terms of the Corporation's financing agreement
with BancFirst. Dividends payable in cash shall be paid by check to the
addresses for the respective Holders on the stock ledger of the Corporation or
as designated by the respective Holders in written notices given to the
Corporation at least two business days prior to the payment date or by such
other means as may be agreed to by the Corporation and the respective Holders.
The Corporation will cause written notice of each Dividend on the Series B
Preferred Stock to be given to each Holder within five business days after it is
determined by the Board of Directors.
3. VOTING RIGHTS: Except as otherwise required by law and as provided
herein, the Holders of the Series B Preferred Stock
99
<PAGE> 10
shall be entitled to vote on equal terms with the holders of the Common Stock as
a single class of the Corporation, that is one vote per share of Series B
Preferred Stock.
4. LIQUIDATION PREFERENCE: In the event of any voluntary of involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
Holders of the Series B Preferred Stock then outstanding shall be entitled, for
each share of Series B Preferred Stock, to be paid out of assets of the
Corporation available for distribution to its stockholders $5.00 (such amount
payable being adjusted appropriately to reflect any stock split, stock
dividend,, reverse stock split, or any transaction with comparable effect on the
capital stock of the Corporation) (the "Liquidation Preference"). This
entitlement of the Holders of the Series B Preferred Stock, to the extent equal
to $5.00 for each share of Series B Preferred Stock, shall be satisfied before
any similar payment shall be made or any assets distributed to the holders of
the Common Stock or any other security junior in rank to the Series B Preferred
Stock as to distribution of assets upon such dissolution, liquidation or winding
up and otherwise shall be satisfied on a pari passu basis with the holders of
the Common Stock. If the assets of the Corporation are not sufficient to pay in
full the liquidation payments payable to all of the Holders of the outstanding
share of Series B Preferred Stock, the Holders of all such shares shall share
ratably in such distribution of assets in accordance to the liquidation
preference to which they are entitled. For the purposes of this section, neither
the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation nor the consolidation or merger of the Corporation
with one or more other corporations shall be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, unless such voluntary sale,
conveyance, exchange or transfer shall be in connection with a dissolution or
winding up of the business of the Corporation.
5. RESTRICTIONS ON TRANSFER: The shares of Series B Preferred Stock are
unregistered securities. Therefore, the following restrictions apply to their
transfer:
THE SHARES OF SERIES B PREFERRED STOCK HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") NOR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATES, AND HAVE BEEN ISSUED IN RELIANCE
UPON EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION FOR NONPUBLIC
OFFERINGS. ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION, OR
OTHER DISPOSITION OF ANY SUCH SECURITIES OR ANY INTEREST THEREIN MAY
NOT BE ACCOMPLISHED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS, OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY IN
FORM AND SUBSTANCE TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION
AND QUALIFICATION ARE NOT REQUIRED.
100
<PAGE> 11
6. CONVERSION: The shares of Series B Preferred Stock are convertible
into shares of the Common Stock of the Corporation according to the following
provisions:
a. The conversion price for shares of the Series B Preferred
Stock will be affected by whether or not the Corporation has
filed a preliminary Form S-1 (or other applicable registration
statement form for an initial public offering) with the
Securities and Exchange Commission for an offering of the
Corporation's Common Stock (an "IPO") prior to the expiration
of six months after the acquisition by the Corporation of 100%
of the capital stock of United Marketing Solutions, Inc.
("UMSI") which will result in UMSI becoming a wholly owned
subsidiary of the Corporation (the "Merger").
c. IPO Before Six Months: The Series B Preferred Stock will be
convertible into Common Stock, at the Holder's option,
beginning six months after the closing of the Merger at a
conversion price which is the lesser of (a) $5.00 and (b) 110%
of the price for Common Stock issued in a private placement or
IPO (a "Corporation Stock Sale"). For example, if the a
Corporation Stock Sale occurs at $6.00 per share, the
conversion price used will be $5.00 and the 70,000 shares of
Series B Preferred Stock would be convertible into 70,000
shares of Common Stock. If a Corporation Stock Sale occurs at
$4.50 per share, the conversion price would be $4.95 (110%),
and the 70,000 shares of Series B Preferred Stock would be
convertible into approximately 70,707 shares of Common Stock.
d. No IPO Before Six Months: The Series B Preferred Stock will
be convertible into Common Stock at a conversion price which
is the lesser of (a) $4.50 and (b) 110% of the price for the
stock in a Corporation Stock Sale. For example, if a
Corporation Stock Sale occurs at $5.00 per share of Common
Stock, the conversion price used will be $4.50 and the 70,000
shares of Series B Preferred Stock would be convertible into
approximately 77,778 shares of Common Stock. If a Corporation
Stock Sale occurs at $3.00 per share, the conversion price
would be $3.30 (110%), and the 70,000 shares of Series B
Preferred Stock would be convertible into approximately
106,060 shares of Common Stock.
f. The conversion price for shares of Series B Preferred Stock
is subject to adjustment in the event of a stock split, stock
combination or similar adjustment in the number of shares of
Common Stock outstanding. All shares of Common Stock issued
upon conversion of any shares of Series B Preferred Stock
shall be fully paid and nonassessable.
101
<PAGE> 12
g. Any Holder of Series B Preferred Stock desiring to convert
any or all such shares into Common Stock shall so indicate in
writing to the Corporation. The Corporation shall, within
three business days after receipt of such written exercise,
cause to be issued and delivered, to such Holder a
certificate(s) representing the number of full shares (rounded
to the nearest whole number) of Common Stock to which such
Holder shall be entitled pursuant to the then-applicable
conversion price. Such conversion shall be deemed to have been
made on the date of receipt of such written notice from such
Holder, and such Holder shall be treated for all purposes as
the record holder of such Common Stock on such date and
thereafter.
7. SECURITIES CERTIFICATES: Shares of the Series B Preferred Stock
shall be certificated securities, and the transfer agent shall maintain the
stock ledger containing the names of the Holders and the amounts of such
Holders' shares of Series B Preferred Stock. Upon written request to the
Corporation, the Corporation shall forward to any Holder a copy of the page of
the Corporation's stock ledger indicating such Holder's amount of Series B
Preferred Stock recorded therein. The Corporation shall transmit to each Holder
of Series B Preferred Stock upon issuance of such stock certificate a statement
containing the terms herein. Each certificate shall bear a legend in the form of
the legend in paragraph 5 herein. No transfer of Series B Preferred Stock shall
be recorded in the stock ledger of the Corporation in violation of the
restrictions stated on such stock certificate.
8. REDEMPTION/CORPORATION'S RIGHT TO CALL: The Series B Preferred Stock
will be redeemable, in whole or in part, at the sole option of the Corporation
at any time. Upon a call in writing by the Corporation mailed to the Holders
(the date of such mailing, the "Call Date"), Holders of Series B Preferred Stock
will have twenty (20) days to elect to convert their Series B Preferred Stock
into Common Stock. Following twenty-three (23) days after the Call Date, the
Corporation may redeem such Series B Preferred Stock and forward to the Holder
the redemption price, calculated as follows. If the Series B Preferred Stock is
called within the first six months after the Merger, such shares will have a
redemption price of $5.00 per share plus all accrued but unpaid dividends up
through the date ten days following the Call Date. If the Series B Preferred
Stock is called more than six months after the Merger, the redemption price will
be $6.00 per share plus all accrued but unpaid dividends up through the date ten
days following the Call Date.
9. REDEMPTION/HOLDER'S RIGHT TO PUT: The Series B Preferred Stock will
be redeemable, at the sole option of the Holder, at the following time and in
the following amounts: (1) 50% redeemable six months from the date of issue; (2)
25%
102
<PAGE> 13
redeemable nine months from the date of issue; (3) 25% redeemable one year from
the date of issue. The redemption price shall be $5.00 per share plus all
accrued but unpaid dividends upon written notice by the Holder to the
Corporation.
RESOLUTION REGARDING THE BOARD OF DIRECTORS
BE IT FURTHER RESOLVED, that the Board of Directors of the Corporation
shall consist of five directors. The number of directors may be
increased only upon an affirmative vote of the holders of the Company's
Series A Preferred Stock at a shareholder meeting of the holders of the
Series A Preferred Stock called for such purpose.
TRANSFER OF STOCK PURCHASE WARRANTS
BE IT FURTHER RESOLVED, that the President and Secretary of the
Corporation are authorized and empowered to issue stock purchase
warrants for purchases of Common Stock to such persons and in such
amounts as provided for in the Transaction Documents;
BE IT FURTHER RESOLVED, that the shares of Common Stock issued and sold
by the Corporation upon exercise of the stock purchase warrants
authorized pursuant to the foregoing resolution shall be evidenced by
certificates that shall have placed prominently thereon all legends
required by federal law, Nevada law, the Certificate of Incorporation
and/or the Bylaws;
BE IT FURTHER RESOLVED, that each share of Common Stock issued and sold
by the Corporation upon exercise of the stock purchase warrants
authorized pursuant to the foregoing resolution, when the full purchase
price therefor shall have been received by the Corporation, shall be a
duly and validly issued, fully paid and nonassessable share, and the
consideration received therefor shall be credited to the appropriate
capital accounts of the Corporation;
BE IT FURTHER RESOLVED, that the stock purchase warrants granted and
issued by the Corporation pursuant to the foregoing resolution shall be
evidenced by a warrant certificate in the form attached hereto as
Exhibit D; and
GENERAL AUTHORITY RESOLUTION
BE IT FURTHER RESOLVED, that the President and Secretary of the
Corporation are authorized, directed and empowered on behalf of the
Corporation and in its name to execute any applications, certificates,
agreements, or any other instruments or documents or amendments or
supplements thereto, or to do and to cause to be done any and all other
acts and things as such officers may in their discretion
103
<PAGE> 14
deem necessary or appropriate to carry out the purposes of the
foregoing resolutions.
IN WITNESS WHEREOF, the undersigned, being all of the members of the
Board of Directors, have executed this consent as of the day and year first
above written. This consent may be executed by facsimile.
[SIGNATURES APPEAR ON THE NEXT PAGE]
104
<PAGE> 15
/s/ Lawrence Grimes
--------------------------------------
Lawrence Grimes,
President and Director
/s/ Kenneth Brochin
--------------------------------------
Kenneth Brochin,
Secretary, Treasurer and Director
/s/ David Grossman
--------------------------------------
David Grossman
Director
/s/ Jeffrey Sens
--------------------------------------
Jeffrey Sens
Director
/s/ Joel Sens
--------------------------------------
Joel Sens
Director
105
